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Nike stocks surge following Betsy Ross sneaker controversy

Nike stocks have seen a surge in the days after it opted to recall a Fourth of July-themed sneaker that was to bear the Betsy Ross Flag after receiving complaints from its star endorser and ex-NFL quarterback Colin Kaepernick.

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The shoemaker revealed on Monday it had pulled the Air Max 1 USA shoe, which included a Revolutionary War-era U.S. flag with 13 white stars in a circle on the heel.

Nike recalled the sneaker after Kaepernick asked the company not to sell a shoe with a symbol that he and others considered offensive because of its connection to the era of slavery. 

The move to remove the sneaker sparked a conservative backlash, including from Arizona’s governor who slammed it as a ‘terrible decision’ before withdrawing a $2 million incentive for Nike Inc to build a plant in the state.

But despite the controversy, Nike stocks have actually seen an increase and are up two percent since Tuesday. 

Shares were $86.82 at closing on Friday.  

The rise in stocks added almost $3 billion to the company’s market value. 

Nike’s share price experienced a similar surge after the brand made Kaepernick – the controversial free agent quarterback – the face of its ‘Just Do It’ advertising campaign in September last year. 

Stocks reached a then-record high of $86.04 in the weeks after the campaign featuring Kaepernick was released. 

It may explain why the shoemaker deferred to Kaepernick when he raised concerns over the sneaker featuring the early American flag this week.  

Kaepernick reached out to Nike after learning they planned to release the sneaker to explain that the flag has ties to the era when black people were enslaved and, more recently, it has been appropriated by white nationalist groups, sources said. 

Nike decided to recall the shoe after it had been already sent to retailers to go on sale this week for the July Fourth holiday, according to the Wall Street Journal.  

The decision caused an instant backlash among conservatives, who accused Nike of denigrating U.S. history, with Arizona Governor Doug Ducey tweeting that he is asking the state’s Commerce Authority to withdraw financial incentives promised to Nike to build a plant in the state.

Others expressed surprise that the symbol known as the ‘Betsy Ross’ flag, so named after the beloved Philadelphia woman credited with designing it, could be considered offensive. 

Although some extremist groups appear to have appropriated the flag, it is not widely viewed as a symbol of hate, and is used in museums that focus on 18th century U.S. history. 

The Anti-Defamation League does not include it in its database of hate symbols. 

Mark Pitcavage, a senior research fellow for the ADL’s Center on Extremism, said extremist groups have occasionally used it, but the flag is most commonly used by people for patriotic purposes.

‘We view it as essentially an innocuous historical flag,’ Pitcavage said. ‘It’s not a thing in the white supremacist movement.’

Nike said in statement that ‘it pulled the shoe based on concerns that it could unintentionally offend and detract from the nation’s patriotic holiday.’ 

The company pushed back against criticism that the decision was being ‘anti-American.’

‘Nike is a company proud of its American heritage and our continuing engagement supporting thousands of American athletes including the U.S. Olympic team and U.S. Soccer teams,’ Nike said. 

Nike is showing consistency by listening to Kaepernick, the star of the brand’s ‘Just Do It’ campaign last year that ultimately proved a win for the company, said Chris Allieri, founder of New York public relations firm Mulberry & Astor.

‘Listening to somebody that has helped the brand in so many countless ways, it makes sense. It would be completely hypocritical for them not to listen to him,’ Allieri said.

Kaepernick was the first NFL athlete to take a knee during the national anthem to protest police brutality. 

Some people called for boycotts after Nike featured him in a campaign last year that included a print ad featuring a close-up of his face and the words, ‘Believe in something. Even if it means sacrificing everything’. 

Nike’s annual sales have jumped 7 percent to more than $39 billion, according to the company’s last quarterly report. Its stock is up 12 percent since the start of the year. 

Nike CEO Mark Parker has said the Kaepernick campaign inspired ‘record engagement with the brand,’ an important goal for a company trying to strengthen its direct-to-consumer business.

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