GAP

Please note, on 08/22/24 The Gap, Inc. changed its ticker to GAP. The content of this idea may make reference to the original ticker symbol, GPS.
Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Gap Inc/The (GPS), Target Corp (TGT), Walmart Inc (WMT)

Highlights

The presenter is short shares of The Gap Inc (GPS), a medium-duration position with a potentially shorter-term catalyst. Shares are priced at ~$16 per share, down ~50% from this time last year, and he thinks investors are now buying into the thesis that Old Navy’s struggles can be attributed to a fixable product issue. Once this occurs, bullish investors reason that comps will turn positive and a growth story will emerge. The presenter believes Old Navy’s issues are misunderstood and, paired with dissynergies stemming from the Gap/Old Navy split, considerable downside remains. He expects share prices to fall to $12 – $13 in the next three months, identifying the Investor Day on September 12th as a catalyst when management will presumably disclose dissynergy and capital structure information for the split. Rolling forward another three months (six months from now), he sees additional downside to ~$10 per share on the back of missed guidance.