Oct 21, 2025
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Jeans rarely make Wall Street headlines, but the denim feud between American Eagle and Gap has investors paying attention.
In late July, American Eagle rolled out its Sydney Sweeney campaign with the tagline “Sydney Sweeney has great jeans.” The ad went viral, but not in the way the company hoped. Critics slammed it as “rage-bait,” sparking backlash over its racially-charged undertones.
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For a moment, Wall Street didn’t care. Shares surged as much as 24% — the biggest percentage gain in 25 years. But the boost was fleeting. According to Bloomberg Second Measure, sales slid year over year, dropping from 17.5% the week of July 20 to nearly 11% by July 27. Online traffic also dipped.
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Gap, meanwhile, leaned into nostalgia. Its “Better in Denim” campaign tapped into Y2K vibes, featuring girl group KATSEYE with Kelis, singing “Milkshake.” The campaign clicked with consumers, sending engagement soaring and giving shares a 4% lift in August.
Ad campaigns can move the needle in the short term, but building an investment strategy around them is like buying jeans for the logo instead of the fit — flashy now, disappointing later.
When controversy meets the bottom line
For denim retailers, 2025 has been more about headlines than hard numbers.
American Eagle Outfitters (AEO) has had a rough run, with shares down about 25.9% since the start of the year. A pre-earnings rally lifted the stock to $12.55 in mid-May, but momentum stalled when the company pulled its outlook and posted a deeper-than-expected loss. Shares fell below $11 before inching back to $12.85 by August 29.
That rebound lined up with the company’s Sydney Sweeney campaign — a pop culture play that put American Eagle back in the spotlight. But analysts caution it may not translate into lasting gains.
"Near term, there is risk that the recent Sydney Sweeney campaign added momentum," Bank of America analysts wrote. "However, we do not assign a high likelihood that momentum from this campaign can fully inflect the business over the long run."
The controversy hasn’t helped. Allegations by critics surfaced that the “Sydney Sweeney’s got great genes” campaign carried undertones linked to eugenics, a discredited genetic theory often invoked by white supremacists. Sweeney also came under scrutiny for being a registered Republican, drawing attention from President Donald Trump.
Gap has gone a different route, leaning on culture as much as clothing. On the second-quarter earnings call, CEO Richard Dickson highlighted the runaway success of its latest “Better in Denim” campaign. The results were eye-catching: 20 million views in three days, 400 million overall and more than 8 billion impressions across platforms. The campaign even hit the top of TikTok’s search rankings.
“These aren’t small facts or small stats,” Dickson said. “This is proving that Gap is a powerful pop culture brand.”
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Still, viral momentum doesn’t always translate into sales. Gap’s Q2 2025 earnings told a chillier story: net sales held flat at $3.7 billion, margins narrowed and comparable sales rose just 1%. With tariffs and macro headwinds squeezing profits, the glow from the campaign may fade before the fundamentals catch up.
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Diversify beyond denim
For American Eagle and Gap, the message is simple: viral campaigns can light up social media, but they don’t guarantee stronger sales or long-term profitability. A TikTok trend may spark a short-term bounce, but investors shouldn’t confuse visibility with stability.
The smarter play is to focus on fundamentals and protect your portfolio through diversification. That means balancing growth opportunities with stable assets, such as dividend-paying stocks, bonds and ETFs, that spread your risk across various sectors. Anchoring your investments in consistent performers helps insulate you from the volatility that comes with chasing the market.
And if you’re unsure where to start, talk with a certified financial advisor. They can help you weigh your risk tolerance, spot opportunities that align with your goals and build a long-term strategy tailored to you.
Likes and views may keep a brand in the cultural spotlight, but for investors, the real measure of success is sustainable profitability. That requires a portfolio built to last.
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Victoria Vesovski is a Toronto-based staff reporter at Moneywise covering personal finance, lifestyle and trending news. She holds degrees from the University of Toronto and New York University, and her work has appeared on platforms including Yahoo Finance, MSN Money and Apple News.
