American Eagle may join meme rally on news of collaboration with Sydney Sweeney
'More and more investors are feeling somewhat invulnerable right now,' analysts say

Shares of American Eagle Outfitters soared 24% in post-market trading yesterday, July 23, following the launch of a promotional campaign with actress Sydney Sweeney, with the gains extending into early trading today. The marketing move, combined with the momentum of its stock, has sparked strong reactions on trading forums and social media. Overall, a new surge of interest in meme stocks has swept Wall Street in recent days, recalling the GameStop and AMC rallies years ago. With weak financials and high short interest, American Eagle could be the latest stock to benefit from the ongoing "meme fever," writes MarketWatch.
Details
Casual clothing brand American Eagle Outfitters has suddenly found itself in the meme spotlight, with its shares climbing 6% in yesterday's regular session and another 22% after the closing bell. In premarket trading this morning, the gains have extended another 16% as of this writing. The reason is the announcement that A-list actress Sydney Sweeney will head up an autumn promotional campaign.
The campaign, ironically titled "Sydney Sweeney Has Great Jeans," will include 3D billboards in which Sweeney interacts with passersby, a Snapchat lens that lets her speak to Snapchatters, and AI enabled try-on technology. American Eagle will sell jackets and jeans inspired by the actress, as well.
As the company pointed out, this is one of the biggest celebrity collaborations in its history. And the most expensive to date, noted Reuters. The campaign caused a stir on social media and investor forums like WallStreetBets on Reddit. American Eagle also entered the top five trending stocks on Stocktwits.
Meme moment
The meme trade has come back to life after the original rally in 2021, when retail investors pushed up the prices of GameStop, AMC, and other favorite companies. Starting this month, small-cap players such as Opendoor, GoPro, Kohl's, and Krispy Kreme have seen their stocks soar.
American Eagle, which has lost 35% of its market value year to date, fits well into this category: weak financials, low expectations, and now the promotional campaign trigger, as MarketWatch notes. According to Visible Alpha, of the six analysts tracking the stock, four have "hold" recommendations, one rates it a "sell," and one has it a "buy."
As in 2021, most meme stocks have high short interest: For Krispy Kreme and Opendoor it is 21-28%, and for Kohl's nearly 49%. Short interest in American Eagle stood at 12.2% of its public float, according to LSEG data cited by Reuters.
What analysts say
Interactive Brokers chief strategist Steve Sosnick put the mood in markets like this: "I think more and more investors are feeling somewhat invulnerable right now. Everything they’ve been trying has been working for them. If the basic stuff’s working, why not try a bit more speculative stuff?" However, Sosnick warns, "It could all end tomorrow, it could all end in months... [But] if enough people get on one side of an option trade, it can become self-fulfilling, at least in the short term."
Mark Newton, head of technical strategy at Fundstrat, echoes Sosnick's caution in a note quoted by CNBC: "At some point this steady stream of optimism likely will cause sentiment to jump to speculative levels which would warn of a selloff as nearly 80% of US companies have beaten 2Q earnings thus far and Meme stocks have been making a comeback."
CNBC did write that bursts of speculative rallies in meme stocks have been largely held in check.
Context
Investors should consider the risk of strong fluctuations in American Eagle and look out for its next earnings report, which is due on September 4, MarketWatch points out. The retailer posted a loss in the first quarter and pulled its full-year guidance, citing macroeconomic uncertainty.
Corey Tarlowe, lead analyst at Jefferies, told clients that the American Eagle management expects "ongoing headwinds facing the consumer could impact top-line growth and margin performance over the next 6-12 months." To address this, it plans to reduce costs from its sourcing vendors and diversify its supply chain, in particular bringing China sourcing to under 10% this year.
This article was AI-translated and verified by a human editor