Sydney Sweeney ad uproar revives meme-stock ‘squeeze’ play   

American Eagle’s stock meteoric rise after showcasing actress Sydney Sweeney’s best assets in its jeans ad has put the company at risk of a dreaded short squeeze, On The Money has learned.

Yes, the uproar over the spicy campaign featuring the blonde honeypot – which the “woke” mob has branded as racist – has breathed new life into the meme-stock phenomenon of torching short seller-professional investors who bet shares will tank by “squeezing” American Eagle’s stock to new heights, sources who follow the money said.

During its pandemic-induced craze days in 2021, a massive squeeze put a hedge fund out of business – to the delight of millions of retail traders who banded together to drive stocks like GameStop and AMC to the moon. 

The odd cultural moment involving American Eagle could make it ripe for a similar buying frenzy.

So-called short interest in the stock  (an indicator of how many negative bets are being placed)  was at an already dangerously high level of 31% before the ad for the “Euphoria” star touted her good “jeans” and “genes,” according to S3 Partners, which follows shorting by professional traders.

Then, when Sweeney flashed her all-denim look in July, shares began to tick up. Massive publicity, first positive, that the sultry starlet generates got people once again talking about the fading jeans company.

Even when the looney lefties began to attack the ad for promoting white nationalism – because the commercial for the blonde and blue-eyed beauty played with the word “genes” – shares held their ground.

Sales of American Eagle jeans didn’t falter because let’s face it, most Americans aren’t idiotically woke.

Enter Donald Trump. Our president is an expert at reading the mood of the country and he’s not bad at finance either. As the controversy swirled, and knowing that his voters and most Americans have had it with woke, he pounced.

First, it was at a press conference Monday when he was told that the actress – better known for her cleavage than her politics – is a registered Republican. 

He quipped “Oh, now I love her ad.”

A bit later, after he was probably given a full briefing on the contretemps, he followed with a Truth Social Post: “Sydney Sweeney, a registered Republican, has the ‘HOTTEST’ ad out there. It’s for American Eagle, and the jeans are ‘flying off the shelves.’ Go get ‘em Sydney! …The tide has seriously turned — Being WOKE is for losers, being Republican is what you want to be. Thank you for your attention to this matter!”

Shares responded, soaring by a whopping 30% in just a few hours to close Monday at $13.08.

Bob Sloan, the CEO of S3 and my partner in the “Risk and Return” podcast, is the godfather of deciphering short and long-holding stock data.

He tells me shorts are now breaking even with their bets but the stock is “getting squeezier,” which means it’s entering dangerous territory for negative trading bets.

Another Trump tweet, and some improving fundamentals like a spike in jeans sales based on the controversy could easily put it in squeeze land, Sloan added.

The stock’s surge is a rare win for a company that reported sub-par performance in the latest quarter, even showing a loss as sales slipped from a host of headwinds – from higher tariff-related costs to increases in promotional expenses.

But it also might bring us back to the “squeeze days” when sharp increases in the price of a handful of beaten-down and heavily-shorted stocks became national news.

In a short sale a trader borrows a stock, sells it, and hopes to make money repaying the borrow at a lower price.

The borrower loses money if the stock rises – and wads of it if he’s “squeezed” by ever high prices— which is what happened during the meme craze. 

 Stay tuned to see if that cycle repeats itself.