On shares slump 4%: How Mbappe's joke on Mao triggered Tuesday's fall

What happened

Shares of On Holding AG fell close to 4% in early trading Tuesday after soccer star Kylian Mbappe's comments about Mao Zedong sparked a backlash in China. The stock had gained 2% on Monday.

Confirmed

Global impact / market context

China is described as a key growth market for the Swiss sportswear company. A consumer backlash there could hurt demand for On's products, and Chinese companies ending partnerships may pressure revenue and brand reputation in that region.

Analyst inference

On shares have struggled this year, trading around the low $30s, well below a 52-week high near $51. The athletic footwear sector faces broader challenges, and rival Nike has also faced slowing growth and market-share losses.

Analyst inference

What to watch

1. Chinese companies including beverage maker Dongpeng, dairy giant Mengniu and cheese producer Milkground announced they were ending their ties, which means partnerships with the soccer star are being cut. Confirmed
2. Watch whether the backlash spreads to consumer demand for On products in China, since lost sales there would directly reduce revenue in what the article calls a key growth market. Analyst inference
3. Watch how On responds publicly and whether it tries to repair its brand in China, because a slow or weak response could extend the damage to its reputation and sales. Proposed

Evidence

• invezz.com