China, TikTok, and Gen Z: A CNBC Analyst Sees a Good Opportunity in Crocs Stock

Now is the perfect time to buy shares in Crocs, a small footwear manufacturer, according to an article by CNBC analyst Justin Zacks. Partnerships with celebrities, integration with TikTok Shop, and the release of new models are fueling demand for its products among Gen Z, especially in China. At the same time, the company’s stock is trading at a significant discount to competitors such as Nike, the analyst writes.

Crocs stock has risen more than 37% since the start of the year—to $117.50. This has led some investors to think they’ve missed an opportunity to buy the stock, writes CNBC analyst Justin Zacks. He believes that’s not the case. The company’s shares are still trading below their levels from five years ago—the current valuation is only eight times the projected earnings for the next 12 months. This represents a significant discount compared to the stocks of competitors such as Nike, while Crocs has more growth drivers, according to the article.

Here are the drivers that Zaks identifies.

— Release of new shoe models.

The 2026 launch of the Saturday Sandal—a two-strap sandal that can be personalized—received “an exceptionally positive response from customers and retailers around the world,” said Crocs CEO Andrew Rees during a conference call with analysts discussing second-quarter results. At that time, the company reported a 2% year-over-year increase in revenue (excluding currency fluctuations) to $1.18 billion, which allowed it to raise its full-year 2026 forecast.

Rice noted that sales momentum in the sandal category has strengthened Crocs’ position in North America, enabling the company to return to sales growth in the region. He expects this category to become an even more significant driver of growth globally in 2027 and beyond.

Riz also noted that shoppers are showing a strong interest in casual-style shoes, which are particularly popular in Asia.

"We are encouraged [...] by the fact that growth is becoming increasingly diversified," wrote Bank of America analyst Kendall Toscano following the release of the quarterly results (her comments are cited by Zacks).

— Marketing and celebrity partnerships.

Crocs aims to turn its shoes into “the ultimate symbol of individuality, authenticity, and high fashion,” writes Zacks. The brand has released collections with musicians Justin Bieber, Post Malone, and Bad Bunny; actresses Drew Barrymore and Millie Bobby Brown; and luxury designers Balenciaga and Christopher Kane.

In June, Crocs launched its first shopping series on TikTok in collaboration with the footwear brand Déjà Shoe, allowing viewers to purchase the featured styles right while watching. This move boosted demand for ballet flats and sandals and increased traffic to the Crocs website, Rice said during a conference call.

He also noted that the company is currently “testing several innovations” in addition to the traditional Jibbitz charms, which attach to the ventilation holes in shoes to create a personalized look. The head of Crocs called the ability to personalize products “a powerful driver of consumer engagement and a key competitive advantage for the brand.”

— Growth in China.

Crocs' international revenue increased by 7.8% to $542 million in the second quarter. Meanwhile, in the company's priority markets, including China, it posted "double-digit growth," Rice said.

Zacks believes there is still untapped potential. “China is Crocs’ second-largest international market, but it accounts for only 4% of global sales. Yet there are a lot of people in China. That’s a lot of feet,” he quotes the company’s CFO, Patrick Reagan, as saying.

Crocs has won over China’s Generation Z by downplaying its American origins, Zacks continues. To that end, it has, among other things, renamed its global advertising campaign “Come As You Are” to “Born to Be Free.” “It’s important to note that we leveraged our ability to respond quickly and bring a ‘China for China’ product to market in a timely manner, including unique variations of our ballet flats,” said Rice.

Among the positive factors for investors, Zacks cites the strong free cash flow generated by Crocs. The company is using this to repurchase shares: in July, it increased its buyback program by $1.5 billion, bringing the total to $2 billion. The CNBC analyst notes that this could significantly increase earnings per share (EPS). At the end of the second quarter, this figure stood at $4.13, compared to a loss of $8.82. The company noted that last year’s loss was due to a non-cash write-down of $737 million related to the HeyDude brand.

A CNBC analyst believes that recent changes in revenue accounting are hindering a fair valuation of Crocs shares. Due to a new arrangement with a major partner of the footwear manufacturer, starting in the third quarter, a portion of its revenue will be reclassified from “direct-to-consumer sales” to “wholesale revenue,” Reagan said during a conference call. The company expects this to reduce revenue but have a positive impact on operating profit.

However, Wall Street deemed these explanations insufficient.

“Not only did Crocs management fail to specify which business units are shifting from direct-to-consumer sales to wholesale, but it also did not disclose the amount of the change,” wrote Sam Poser, an analyst at Williams Trading (as quoted by Zacks).

Zaks sees another reason for the discount in Zaks’s stock price in the weak performance of the HeyDude division. For a long time, its revenue had been falling by “double-digit percentages,” but by the end of the second quarter of 2026, it had declined by only 5.7% to $179 million.

Wall Street analysts are divided: Crocs shares have nine “hold” ratings, eight “buy” ratings, and one “sell” rating. The average price target is $137, representing an upside potential of nearly 17%.