Prof G Markets: Adidas’ Crisis Management, Google and Meta Earnings, and Market Moving Fed Speeches

Severing Ties

Adidas' decision to sever ties with Kanye West came after his anti-Semitic comments, leading to a significant economic blow. Scott Galloway emphasizes that the company had no choice but to end the partnership, despite the $250 million hit to earnings and a 16% drop in stock value 1. He also highlights the importance of crisis management and the need for companies to overcorrect in such situations 2.

Crisis management is always difficult. You have to acknowledge the problem, the top garagal has to take responsibility for the decision, and you need to overcorrect.

--- Scott Galloway

The decision, though financially driven, was also a moral stance against hate speech.

   

Economic Impact

The financial repercussions for Adidas are substantial, but Scott Galloway sees potential investment opportunities. He notes that Adidas' market cap of $18 billion appears undervalued compared to its competitors like Nike 3. The current market dislocation, driven by the loss of the Yeezy partnership, presents a unique opportunity for investors willing to take a risk 4.

When everybody hates something, that's a decent time to go into it. When everybody hated Florida real estate in 2010, that was absolutely the right time to get into it.

--- Scott Galloway

This tumultuous period could spell opportunity for those looking to invest in a historically strong brand.