There are a lot of things you could say about President Donald Trump, but that he minces words is likely not on the list for most people. In fact, the president recently offered some support for the clothing chain American Eagle Outfitters (AEO) with its new ad featuring actress Sydney Sweeney. And that support set off a chain reaction that sent American Eagle’s rocket into the sun, with shares up nearly 18% in Monday morning’s trading.
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Trump noted that the ad was the “…HOTTEST ad out there,” and that American Eagle’s jeans, in turn, were “…flying of off the shelves,” which was likely an accidental typo. Trump also declared that “being woke is for losers,” and, in a show of support directly aimed at Sweeney herself, declared “Go get ’em Sydney!”
For those not familiar, the ad in question—which is drawing debate from all sides—features the actress showing off the company’s denims. The ad declares that “Sydney Sweeney Has Great Jeans,” here using a bit of homophony to note that, indeed, Sydney is wearing attractive denims, but also pointing out that “genes are passed down from parents to offspring often determining traits like hair color, personality and even eye color.” Critics declared this American Eagle supporting eugenics. Critics of the critics, meanwhile, pointed out that they were likely reading way, way too much into the ad.
Backing the Elephant
So why did Trump take a hand in this debate? One likely explanation is that Trump wanted to weigh in on his own side. Reports note that Sydney Sweeney is a registered Republican, which made it all the more likely that Trump would come in on her side, delivering a bit of party support at a time when party support seems to be in short supply heading his way.
It is also possible that Trump is using the ad to fight back against “woke” principles. The Trump administration has been aggressively ferreting out “woke” initiatives like diversity and public radio, so seeing Trump weigh in on a very much not-woke ad makes a particular sort of sense.
Is American Eagle a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on AEO stock based on one Buy, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 45.7% loss in its share price over the past year, the average AEO price target of $11.30 per share implies 10.67% downside risk.
