Four months after her controversial American Eagle Outfitters (AEO) jean campaign sent the retailer’s stock soaring (at least temporarily), actress Sydney Sweeney has finally broken her silence.
The retailer’s ad campaign, which rolled out in late July, used a wordplay on ‘genes’ with the tagline “Sydney Sweeney has great jeans,” which sparked debate over race and genetics.
Must Read
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
- Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
In a recent GQ interview, the Euphoria and The White Lotus star downplayed the backlash. When asked about Trump’s Truth Social praise of her ad — which amplified the campaign’s reach — Sweeney called it “surreal,” adding that she “didn’t really see a lot of” the controversy because she was filming 16-hour days on Euphoria’s third season (1).
Following the campaign, American Eagle stock surged 25% after hours on the Q2 earnings report (2). The company says its marketing campaigns with both Sweeney and Kansas City Chiefs’ tight end Travis Kelce brought in 700,000 new customers — and a signature pair of jeans worn by Sweeney sold out in one week (3).
But, while the company’s stock price jumped, its longer-term outlook is unclear. Here’s what to know about investing in virality.
Is viral success fleeting?
While celebrity endorsements can generate online buzz, the question is whether that buzz can translate into long-term, sustainable growth for a brand.
Before the July campaign launch, American Eagle stock was languishing near $10, down over 40% from its yearly high. The company’s Q2 earnings revealed the Sweeney effect: revenue hit $1.28 billion with earnings outperforming analyst estimates at $0.45 per share versus the expected $0.20 (4).
Sweeney told GQ she was “aware of the numbers” throughout the controversy, noting that negative headlines about declining store visits “was all just a lot of talk.”
But foot traffic in stores — and impressions on social media — don’t always translate into sales. The real test will be whether American Eagle’s 700,000 new customers stick around for holiday shopping or if this was just another fleeting social media moment.
There’s a term for that: a ‘meme stock’ goes viral based on social media hype, rather than strong fundamentals like consistent revenue growth (5). A meme stock may appear to promise big returns, but there’s no telling when a skyrocketing stock price will plummet.
While the Sweeney campaign bumped American Eagle back into the spotlight — and bumped its stock price — the retailer still isn’t seeing the highs it saw back in 2021 (or way back in early 2007) (6).
Plus, there’s no guarantee that virality pays off when it comes to the bottom line. Gap’s “Better in Denim” campaign was considered hugely successful, receiving 20 million views in three days and at one point topping TikTok’s search rankings. But Gap’s Q2 net sales remained flat (7).
In other words, there’s no guarantee that viral success — or controversy — will translate into actual foot traffic data, let alone long-term growth.
Trending: I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around
Should you invest in virality?
Buying stock based on celebrity endorsements or social media hype is generally considered high risk, and stocks that rapidly surge in popularity over a viral moment can just as quickly be followed by a crash or pullback.
“Because investors react emotionally rather than logically to social media-driven narratives, these psychological impacts can lead to impulsive and ill-considered financial decisions,” writes Jim Osman for Nasdaq. (8)
When it comes to American Eagle, Seeking Alpha analyst Alan Galecki says “the initial hype and the stock’s massive 25% pop post earnings have reversed,” and he rates AEO stock a “sell” due to “weak fundamentals and an overvalued stock price despite recent marketing-driven hype (9).”
No matter how flashy the campaign or how big the celebrity endorsement, it can’t make up for underlying issues. Galecki says AEO’s long-term growth is “lackluster, with flat sales guidance, declining operational efficiency, ballooned inventories, and operating income at decade lows amid a tough consumer environment.”
Most financial experts recommend making investment decisions based on fundamentals, rather than chasing the market or building an investment strategy around viral moments.
It’s also worth taking a beat and considering whether FOMO (fear of missing out) or confirmation bias (where you favor data that supports your beliefs) is playing a role in your investment decisions.
A longer-term strategy could involve focusing on diversification, which includes spreading your risk among different asset classes and various sectors. It could also mean balancing growth with more stable assets, including dividend-paying stocks, bonds and ETFs. You may want to consider alternative assets as well, such as real estate or gold.
Before making an investment decision based on the latest celebrity endorsement or FinTok, it could be worth chatting with a certified financial advisor to build a longer-term strategy.
A celebrity’s influence may or may not have lasting power, but you definitely want your portfolio to.
What to read next
- Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich — and ‘anyone’ can do it
- Are you richer than you think? 5 clear signs you’re punching way above the average American’s wealth
- Warren Buffett used 8 simple money rules to turn $9,800 into a stunning $150B — start using them today to get rich (and then stay rich)
- This tiny hot Costco item has skyrocketed 74% in price in under 2 years — but now the retail giant is restricting purchase. Here’s how to buy the coveted asset in bulk
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
GQ (1); AEO Inc. (2); Benzinga (3); Investing.com (4); Truist (5); Stock Analysis (6); Money.ca (7); NASDAQ (8); Seeking Alpha (9)
This article originally appeared on Moneywise.com under the title: Sydney Sweeney reacts to Trump praise on jeans ad that sent stock soaring 25%. Should you invest in virality?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.