**NOT FINANCIAL ADVICE. DO YOUR OWN RESEARCH**
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Lots of people been asking me for my DD on gap - so here's a weeks worth of insights & market research into $GAP. I think there's potential, but we won't know the result until ER's.
Traditional metrics at a glance before diving in.
**Price & Value:** It's currently trading at a P/E of \~9.5 which tends to signal "undervalued" or "something is wrong". Which one is it here? I compared to competitors -- LULU has a P/E of 12 & AEO: P/E of 16.5. We need to rule out "something is wrong" -- which I discuss below (is GAP dead?). It's trading at a significant discount... why?
**Stability**: GAP has a solid dividend (\~3% at the time of posting) & has been around since the 1960s. It is a very well known and recognized international brand that's not going anywhere.
**Sentiment**: Everyone I chatted with was bullish on GAP. I didn't see many real big bear arguments other than "it's a dead brand" and "insiders sold 500k shares". I commented on those below & would like to hear more views on why this is a bad investment or my thesis is wrong / will not play out.
**Team:** You can do your own research into the executive team here, I had a glance over a few people. They have a solid team who can execute & who I believe are genuinely interested in turning the company around. Current CEO ran Mattel for a long time & was heavily involved in growing barbie, hot wheels & fisher-price. He's been CEO of GAP for \~2 years and doing well via his playbook. The rest of their executive team also has an impressive history. Price hasn't really moved in the last 2 years despite good execution (imo). [https://www.gapinc.com/en-us/about/leadership/executive-leadership-team](https://www.gapinc.com/en-us/about/leadership/executive-leadership-team)
**Current Average Analyst PT:** \~24.4
**Catalyst**: They just launched their most successful ad campaign ever -- I validated it was real myself. I haven't seen too many in the investing world talking about it. See the reference source below (another WSB's DD) for tik tok impressions - it's over 100 million views on just one video. Their youtube ad has over 3x the number of impressions as the AEO ad did and the campaign is considered by many to be "more successful". They got over half a billion views in aggregate. **The ad campaign started on AUG 19th, ONLY 9 DAYS BEFORE THE LAST ER's & resulted in an 8.5% increase in foot traffic during the first week.** The rest we don't know (we can only speculate). We won't know the true results until next ER's. I looked at the google trends for bullish terms related to this campaign / ad -- see below. We won't know if this was a one off event or the start of a trend until ER's.
**Similar Events:** AEO launched a highly successful ad campaign (Sydney Sweeney has good jeans). I looked at their google trends & diffed them. The trends on this one actually did jump on this ad campaign, similar to how AEO did. And the jumps seemed more pronounced on GAP.
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**Trends (correlated to online sales):** \~40% of gaps sales come from online, some search terms spiked by 200-400% interest. GAP order spiked by \~450%, GAP buy by \~500% & some other related terms I looked up had similar spikes. We're operating on incomplete information here -- I can't quantify how the trends map to sales (they do tend to be correlated tho). Search interest != sales
[Various terms to buy gap online spiked by 200-400% - shown 5 year average](https://preview.redd.it/j3kfhe7jukrf1.png?width=2476&format=png&auto=webp&s=083a51a039a23b3b63ca54b0a43209e12b1e6b33)
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**Trends (correlated to in store sales):** \~60% of sales comes from in store (citation needed -- someone clarify numbers please). This jump in august (ie: before school season) doesn't typically occur. There is a periodic trend that can been seen spiking in November (what happens in nov???). I noticed this across all search terms. Search interest for "Gap location" spiked by a staggering 800% and "Gap store" spiked \~300%. The Aug / sept spike doesn't usually occur - it's a unique event (which I suspect is related to the ad campaign).
[Google trends ](https://preview.redd.it/ux3xmsra0orf1.png?width=2326&format=png&auto=webp&s=7e5080f72af3b4fdd24920fbb4e145d1ef61eb94)
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Relative spike / comparable one for AEO (It also lasted a similar amount of time). For comparison purposes. For reference -- AEO is up from $11 to $17 (55% since they started their ad campaign). GAP is up... \~2% (\~$21 -> 21.7)
https://preview.redd.it/sk2fr4jekdsf1.png?width=1175&format=png&auto=webp&s=95ab5cf48b4a14738c314d89c55a0e9f1f273ac6
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**ER's Call:** I listened to the entire ER's call. You can find it on youtube here. [https://www.youtube.com/watch?v=dQpVaT0MNpA](https://www.youtube.com/watch?v=dQpVaT0MNpA) . Transcript can be found here: [https://finance.yahoo.com/quote/GAP/earnings/GAP-Q2-2026-earnings\_call-351764.html](https://finance.yahoo.com/quote/GAP/earnings/GAP-Q2-2026-earnings_call-351764.html)
**Insights**: TLDW: Focusing on growth, brand. Mentioned ad a few times -- but didn't push it or mention potential impacts much. CEO dropped some hints, but I don't think they were picked up on by many
**\~28:40** (Katrina O'Connell, CFO): "Last quarter, we previewed an estimated net tariff impact of fiscal twenty twenty five of approximately 100,000,000 to 150,000,000 from the April trade policy. I am proud that the teams have since mitigated the majority of that impact. Reflected in our outlook today is the estimated incremental impact related to the latest trade policies effective August 7. Starting with full year 2025 net sales, **we continue to expect net sales to be up 1% to 2% year over year**. Our outlook assumes ongoing strength at Old Navy, Gap, and Banana Republic, and a longer recovery at Athleta."
**\~42:40** (Richard Dickson, CEO): "This campaign, which launched last week starring Katseye, has driven record breaking response for the brand. Early reads. This is striking range of probably being one of the most iconic brand campaigns certainly that we've done, but that is out there. People aren't just watching, but they're actively joining and **suggesting that this is actually a cultural takeover**. These are great proof points and elements that, again, the playbook is working".
**My read / take:** They are forecasting not a huge jump in net sales & didn't push the ad super hard as the results were unknown. They mentioned their ad got 20million views in the first 3 days. I don't think people paid too much attention to it on the call, via the Q&A at the end. Search for "eye" in the transcript - it was only mentioned twice as far as I can tell. GAP has had a beat on the last 8 ER's. You can validate this yourself. They seem to undersell themselves on guidance / projections each time (ie: I think CEO might sandbag guidance to get beats every time). Tariffs were mentioned \~30 times on the call - I think that's the concern most analysts had (risks) & was a major discussion point (dominating the ad campaign)
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**Bear Arguments:**
**Insider Selling (recent 500k):** For people worried about the recent 500k share insider sale. I looked into it. As per google: "Following the transaction, Mr. Fisher directly owns **12,835,433 shares**, indirectly holds 2,829,502 shares by trust, 132,257 by spouse and 22,015,000 by limited partnerships", ie: **he owns \~38million shares** still. He's been a director of GAP since 1990 & he sold \~1.5% of his stake. **He's 71**, probs just want a house on the water or something. **I give him a pass.**
**GAP IS DEAD:** I asked around a bit (including talking to girls in the bar, and had 3 friends go to the store and talk to employees / view foot traffic). I don't believe this is true. Several of the girls I chatted with were into GAP (aged \~24-28) and two had even heard of the katseye ad. I asked a few investors to chat with their kids / wives / etc, and several were into GAP right now (who previously were not). I don't have a large enough sample size to say much about this -- but talking around I don't think it's true. I even went as far as had a few friends physically go to the stores and chat with employees. I got some mixed reviews on how much busier gap is, but the general consensus was "its been getting a little busier these last few years"
**Low Trade Volume:** Welcome to buying things market hasn't noticed yet (or just be completely wrong, both are possible). Nobody was talking about GAP on the investing forums I frequent / lurk. It has very little volume, IV is super low. It's cheap via all traditional metrics as compared to competitors. I suspect people will start to look at / evaluate GAP as we get closer to the ER's. I really have no idea tho -- low volume just signifies to me that not many people are looking at it (yet) - which gives me a little more confidence in my thesis. It means I'm either early or just wrong. The catalyst outlined \*already occurred\* and I'm just trying to price in the effects of it. The general consensus I got from other investors (who hadn't looked at anything) was "gap is dead I thought?"
**Tariffs:** As per above, tariffs were mentioned \~30 times during the last ER's. It was a major talking point, and although it is a risk, imo it's been priced in already. Literally everyone already knows about them & all the analysts considered them when coming up with their existing estimates. ie, imo, priced in.
**I need more bear arguments, please comment bear arguments or correct / highlight misinformation in my thesis. Why won't this thesis play out? I'm aware that trends != sales, I'm operating on incomplete information. If we all knew the results of this it'd be perfectly priced in already**
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**Some sources (WSB DD):** [https://www.reddit.com/r/wallstreetbets/comments/1nkow7c/gapping\_up/](https://www.reddit.com/r/wallstreetbets/comments/1nkow7c/gapping_up/)
TLDR of the DD: Super successful ad campaign (similar to how AEO used sydney sweeney) - but GAPs is looking more successful. Their Youtube ads got over 3x the number of views in a shorter period of time compared to the sweeney ads & GAPs ads have also been insanely successful on tik tok - generating hundreds of millions of impressions. It went viral with the younger generation. Inventory related to the campaign was sold out across the board everywhere the original DD guy looked.
**Comparison of AEO vs GAP campaign (ie: fighting for cultural relevance).** [https://www.brandvm.com/post/gap-vs-american-eagle-ads-2025](https://www.brandvm.com/post/gap-vs-american-eagle-ads-2025)
TLDR: Looks like GAPs campaign had larger impact & even resulted in increased foot traffic during the first week.
**Another high level source / thread:** [https://www.reddit.com/r/wallstreetbets/comments/1n8annm/american\_eagles\_earnings\_blowout\_is\_bullish\_for/](https://www.reddit.com/r/wallstreetbets/comments/1n8annm/american_eagles_earnings_blowout_is_bullish_for/)
TLDR of the DD: Similar catalyst for GAP as AEO.
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**Realistic price targets:** Putting a P/E target of \~12 (imo it is growing after what I looked into) puts the price target up to \~27.5-28.0. They've beat their last 8 er's and market isn't rewarding them for it yet. Their executive team has been delivering ever since Richard Dickson took over as CEO. I also suspect sales may come in hotter than expected resulting in a beat, suggesting even higher targets. I don't see much more downside here, I've been averaging into more calls
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**Poker room:** I posted my positions to WSB's. I was doing DD / market research in the comments with some other investors. Mods silently removed it after a week without telling me. A lot of people picked up on this & asked me why it was removed. Mods didn't give me a reason -- I'll let you guys decide why they would do that
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If you can't stomach the volatility in my positions - then my trading style is not suited for you. I'm either early or wrong, we will know at the next ER's.
Goodluck chat, tell me why this is regarded -- $GAP
