Can Sydney Sweeney Save American Eagle Outfitters?

Is Sydney Sweeney the "it girl" of 2025?

Nearly 100 years ago, actress Clara Bow earned that nickname after starring in a film called It in 1927. Not to be confused with It by Stephen King, first released in 1990.

American Eagle Outfitters AEO made a bold move by creating an ad campaign featuring Sweeney. While no official figure has been given, it’s rumored that the 27-year old Sweeney raked in a cool $20 million for the spots.

In response to the buzz surrounding this campaign, shares of American Eagle jumped 4.3% on Thursday, and have gained about 12% this week. 

No Hate for Sydney

I’m not here to hate on Sydney Sweeney, but I’m not a buyer of American Eagle on this news.

First of all, American Eagle is in retail, not one of my favorite sectors. The retail sector is represented below by the S&P Retail ETF XRT.

The S&P Retail ETF has performed well lately, gaining about 33% since early April. But it’s about to encounter resistance in the area just above $84.50 (black dotted line), which could limit further gains. 

In the longer run, XRT has been a poor performer, essentially going nowhere over the past three years:

As for American Eagle, that stock is down 43% over the past year.

Thanks to the buzz surrounding Sweeney, the stock has managed to climb above its 50-day moving average (blue), but it remains well below its 200-day MA (red). Both moving averages are pointing lower, as is the stock’s bearish trendline (black dotted line).

Thursday’s intraday price action was telling. While the stock was up on heavy volume, shares of AEO opened near their high, and closed near their low of the day.

This is demonstrated on AEO’s 15-minute chart (shaded yellow):

What does that tell us? This bearish price action is reminiscent of the old Wall Street saying: "amateurs create the open, while professionals create the close."

This sequence of events likely occurred because bullish retail traders pushed the stock higher at the open. Meanwhile, traders who were already long AEO used this as an opportunity to exit their positions at a better price.

In other words, existing shareholders aren’t sticking around. When the buzz surrounding Sweeney’s hiring fades, the stock is likely to fade with it.

Don’t Blame Sydney

Sweeney’s hiring makes sense. It’s a bold move that has already thrust American Eagle into the headlines. Other retailers are kicking themselves right now, because they didn’t hire her first.

She appeals to AEO’s age 15-25 target demographic. Sales should see a bump, just due to the fact that for the first time in years, people are talking about American Eagle again.

The problem isn’t Sweeney. The question is, can anyone pull American Eagle out of its multi-year tailspin? 

At the time of publication, Ponsi had no positions in any securities mentioned.