Gap stock is brushing off better-than-expected Q1 results
Gap Inc (NYSE:GAP) stock is freefalling, last seen down 19.7% to trade at $22.49, after the apparel retailer issued lackluster current-quarter guidance. The company forecast flat sales for the current quarter, falling short of Wall Street’s modest growth expectations.
The weak outlook is overshadowing what was otherwise a strong first-quarter. Gap beat earnings and revenue estimates, reporting 51 cents per share on $3.46 billion in revenue. However, executives warned that President Donald Trump’s proposed tariff hikes could carry a $250 million to $300 million price tag -- though mitigation efforts may reduce that impact to $100 million to $150 million.
At least four analysts cut their price targets in response, with Jefferies and UBS lowering their targets to $26 and $17 from $29, respectively. There is still plenty of room for bear notes, as GAP's 12-month consensus target price is a 22.6% premium to current levels.
Today’s selloff erased the year-to-date gains, with the stock now down 4.4%. Shares are also pacing for a fifth consecutive daily loss and the worst weekly performance since 2021. The $22 level is acting as support, but the security is eyeing a close firmly below its 20-day moving average.
Options traders are reacting swiftly. More than 32,000 calls and 30,000 puts have crossed the tape so far — 14 times the average intraday volume. Leading the charge is the weekly 5/30 22.50-strike put, with new positions opening there and also expiring at today’s close.