Duke University basketball star Zion Williamson suffered an injury when his Nike shoe blew apart during a game.

Williamson's shoe ripped in half less than one minute into Wednesday's game against the University of North Carolina. Williamson fell down and injured his knee, keeping him out of the rest of the game. UNC won 88-72. The two schools and Virginia are in a three-way tie for first place in the Atlantic Coast Conference.

Nike shares were down 1 percent Thursday morning.

"We are obviously concerned and want to wish Zion a speedy recovery. The quality and performance of our products are of utmost importance," Nike said in a statement. "While this is an isolated occurrence, we are working to identify the issue."

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Liz Dunn, founder and CEO of retail analytics firm Pro4ma, said one question is whether Williamson can sue. She noted that he is required to wear Nike shoes because of the contract Nike has with Duke.

"It's a very tangled legal web," Dunn said. "I would say that he shouldn't sue if he's managing his career appropriately. He's got a long, long road ahead of him where he can make a lot of money, unless his injury is more serious."

Williamson, a forward, is considered one of the best college players, leading to speculation about his future in the sport and the deals that could come with it.

Shares of Nike competitor Under Armour were up 1.5 percent Thursday morning. The incident could be an opportunity for the company to challenge Nike's dominant position in basketball.

"It's certainly a moment of embarrassment for the brand on a grand scale especially in today's world where live sporting events dominate social media conversation" Baird analyst Jonathan Komp said, "but also not the first, nor will it be the last when you consider Nike sells more than 500 million pairs annually."

Nike's brand is built around the idea that customers can buy the same high-performance product their favorite athletes use, he added. "So if handled correctly, this PR issue could be an opportunity to reinforce this message with consumers. But otherwise premature to comment on the cause of the malfunction or the brand's ultimate reaction. And at this point we suspect this is a contained issue unlikely to broaden to any lasting concern for the stock."

—CNBC's Michael Bloom and Jessica Golden contributed to this report.