American Eagle shares jump most since 2000 after Trump praises Sydney Sweeney ad
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Advertisements featuring actress Sydney Sweeney outside an American Eagle store in New York, on Aug 4.
PHOTO: BLOOMBERG
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NEW YORK – American Eagle Outfitters shares jumped the most since 2000 on Aug 4 after United States President Donald Trump touted the company’s ads – pushing the retailer’s stock into meme stock territory.
The shares spiked 24 per cent after he said in a social media post that American Eagle’s recent marketing blitz with American actress Sydney Sweeney, 27, is the “HOTTEST ad out there”. He said American Eagle jeans are “flying off the shelves”.
It is not yet clear whether the ad campaign – which controversially celebrates Sweeney’s genetic traits as well as her jeans – is convincing shoppers to buy the company’s apparel.
Analysts say the real test will be how American Eagle performs during the crucial back-to-school season as consumers begin to stock up on jeans and other autumn essentials.
So while Mr Trump’s comments do not reveal new information about the company’s performance, they do add to the hype around American Eagle shares. And that has drawn investors betting on the hype itself – a telltale sign of a meme stock.
“What are meme stocks for the most part? Individual investors chasing after the hottest stock,” said Mr Matt Maley, chief market strategist at Miller Tabak & Co.
The move pared the stock’s year-to-date decline to 20 per cent. The company has been battered by sluggish demand, and last quarter, it registered a US$75 million (S$96.6 million) charge related to a writedown of its spring and summer merchandise.
Some traders who drove up the shares on Aug 4 are probably betting that the spotlight on the company will translate into greater sales.
But that alone does not explain the magnitude of the share move, Mr Maley said, adding that American Eagle executives should seize on the interest by, for example, issuing more shares. Meme stock darlings AMC Entertainment Holdings and GameStop have done this in the past.
Representatives for American Eagle did not immediately respond to a request for comment.
An American Eagle advertisement featuring actress Sydney Sweeney on billboards in New York on Aug 4.
PHOTO: BLOOMBERG
“In the short term, traders are very adept at chasing hype,” said Mr Steve Sosnick, chief strategist at Interactive Brokers. “If one believes that the more this is talked about, the better it is for the stock, then that certainly is a boon.”
“Whether or not that translates into more or fewer people buying the actual products” after Mr Trump weighed in will not be clear for “days, weeks or quarters”, Mr Sosnick added.
The interest in American Eagle is likely to continue, even if there is not another major precipitating event like a social media post by Mr Trump.
“The momentum is there,” Mr Maley said. “Today’s marketplace with algorithmic trading, not only does it create buyers, but it also eliminates sellers.”
While Sweeney, a sought-after face for brands, has provided a pop for stocks in the past, those gains have not always endured.
A year ago, footwear company Crocs disclosed Sweeney as a global spokesperson for its Heydude line. The stock rose 4.1 per cent on the day of the announcement, but since then, shares are down nearly 30 per cent. BLOOMBERG
