American Eagle Outfitters recently experienced a significant stock surge, which has drawn attention from both retail investors and the broader market. The catalyst for this sudden interest was a viral ad campaign featuring actress Sydney Sweeney, titled “Sydney Sweeney Has Great Jeans.” This campaign is strategically aimed at appealing to the Gen Z demographic, a crucial consumer base for the brand.
Following the release of the ad on Wednesday, American Eagle’s shares jumped as much as 12% on Thursday. Retail traders on platforms like Reddit’s WallStreetBets quickly took notice, with one user sharing a position of 20,000 shares. The stock’s rally is also notable due to its heightened short interest, estimated to be about 12% of the total float, positioning it as a potential target for a short squeeze.
Despite the enthusiasm surrounding the campaign, American Eagle has faced recent challenges. The company’s latest earnings report indicated a 5% decline in revenue, prompting the firm to adjust its forward guidance. Although the stock’s recent rally offers a glimmer of hope, it remains down 32% year-to-date.
Interestingly, American Eagle shares are now grouped with other meme stocks like Krispy Kreme and Opendoor, which have also seen surges in their stock value this week. This trend highlights a growing phenomenon where the stock market is influenced by social media and cultural trends, rather than solely underlying business fundamentals.
This development reflects a dynamic shift in how younger investors are approaching the stock market, often driven by social media interactions and pop culture figures. While the long-term impact of this trend remains to be seen, one can argue that it stands as a testament to the evolving nature of investment strategies in the digital age, combining entertainment and finance in unprecedented ways.