Gap Stock Crashes on Flat Sales Forecast, Tariff Warning

Core Viewpoint - Gap Inc's stock has dropped significantly by 19.7% to $22.49 following a disappointing current-quarter guidance, which forecasts flat sales, failing to meet Wall Street's growth expectations [1] Group 1: Financial Performance - Despite the weak outlook, Gap reported a strong first quarter, beating earnings and revenue estimates with earnings of 51 cents per share on revenue of$3.46 billion [2] - Executives indicated that proposed tariff hikes by President Trump could result in a cost impact of $250 million to$300 million, although mitigation efforts may reduce this to $100 million to$150 million [2] Group 2: Analyst Reactions - At least four analysts have lowered their price targets for Gap, with Jefferies and UBS adjusting their targets to $26 and$17 from $29, respectively [3] - The current 12-month consensus target price still reflects a 22.6$22 level is acting as support, but the stock is likely to close below its 20-day moving average [4] Group 4: Options Market Activity - Options traders have reacted quickly, with over 32,000 calls and 30,000 puts traded, which is 14 times the average intraday volume [5] - The most active option is the weekly 5/30 22.50-strike put, with new positions being opened and set to expire at today's close [5]