American Eagle Stock Plunges on Guidance Withdrawal, Inventory Woes

Core Viewpoint - American Eagle Outfitters Inc has withdrawn its 2025 guidance due to macroeconomic uncertainty, leading to a significant decline in stock price and expectations for revenue and operating losses [1] Financial Performance - The company anticipates a first-quarter revenue decline of 5% to $1.1 billion, with comparable sales expected to fall by 3%, primarily driven by a 4% drop in its Aerie brand [1] - An operating loss of $85 million is projected, attributed to heavy discounting and a $75 million inventory write-down related to spring and summer merchandise [1] Stock Performance - American Eagle's stock has decreased by 51.2% year-over-year and 27.8% year-to-date, with recent trading below the $12 level, which has acted as resistance [2] - Earlier in the week, the stock briefly rallied and broke above its 80-day moving average but has since fallen back below this trendline [2] Options Market Activity - Options traders have reacted to the selloff, with 19,000 puts traded, which is 44 times the typical volume for this session, indicating a bearish sentiment [3] - The June 10 put is the most popular contract, as traders prepare for further downside [3] - The stock's 50-day put/call volume ratio of 0.99 is higher than all other readings from the past year, reflecting increased put buying [4] - The put/call open interest ratio (SOIR) of 1.94 ranks in the 77th percentile of annual readings, indicating a strong put bias among short-term options traders [5]