Gap Stock Price and Forecast: Why is GPS down 20%? Is $5 the next target?

Gap stock is down over 20% in premarket.
Gap stock earnings reports came out after the close on Tuesday.
GPS missed on EPS and revenue.

Ivan Brian FXStreet

The Gap (GPS) stock fell pretty heavily afterhours on Monday as it reported earnings. The numbers were disappointing with earnings per share (EPS) coming in at $0.27 versus the $0.50 estimate. Revenue was also behind estimates, coming in at $3.94 billion versus $4.44 billion expected. The shares immediately dumped, falling over 20%. The Gap quote at the time of writing is $18.57, a loss of 21%.

GAP Inc chart, 5-minute

Gap (GPS) stock news

We have mentioned the top and bottom line numbers above, but in addition Gap also lowered forecasts due to supply chain issues. Those words have been hitting investors this year, and Gap made a huge reduction to its FY adjusted EPS guidance. This was at $2.10-$2.25 previously, but now Gap guides it at $1.25 to $1.40. This is a huge drop as COVID-19 factory closures in Vietnam have hit Gap especially hard. Gap gets about 30% of its supplies from Vietnam. The downgrades and price target changes are coming in thick and fast this morning with Goldman, Credit Suisse, Wells Fargo, Telsey, Deutsche and B.Riley all lowering their price targets for Gap, while JPMorgan downgraded the stock.

Gap (GPS) stock forecast

Gap had already been struggling and trading in a down channel, but now it has exploded out of that. It was already below the yearly Volume-Weighted Average Price (VWAP), as well as 100 and 200-day moving averages, so trying to buy this one was going against the technical picture. We see no let-up in sight, with $18 being a large support zone going back on the weekly chart. This shows the large volume area until $16. If Gap gets below that, then single figures will surely beckon, not to mention a test of the pandemic lows at $5.26. There is interim support at $12 along the way.

GPS 1-day chart

Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

Gold remains below $4,100 despite receding Fed hike bets, weak USD

Gold opens with a bullish gap at the start of a new week amid receding Fed rate-hike expectations and a bearish US Dollar. Oil prices tumbled after Trump canceled an attack on Iran and said that a deal is near, easing inflation fears. This forces traders to dial back bets on extreme Fed tightening and drags the USD to a fresh low since June 17, which, in turn, is supporting the non-yielding bullion. However, the recent repeated failures to find acceptance above $4,100 warrant caution for XAU/USD bulls.

Gold remains offered around $4,050 despite falling Oil prices

Gold remains offered around $4,050 in Asia on Monday, despite the sharp sell-off in Oil prices and the USD/JPY slump-driven US Dollar weakness. Prospects of Fed rate hikes and Mideast uncertainty keep the bullion under pressure, as the Nonfarm Payrolls (NFP) week kicks in.

Week ahead: US payrolls report and AI earnings to keep investors on edge

After the Fed decision, NFP report awaited for more rate hike clues. Employment also on the agenda in Canada and New Zealand. Chinese trade and Japanese wage data to be watched too. But Iran and AI headlines to remain in driver’s seat for risk sentiment.

Bitcoin dips, Ethereum consolidates, XRP stalls

Bitcoin, Ethereum and Ripple steadied on Monday after falling over 2.8%, 3.55% and 2.35%, respectively, the previous week. BTC trades below the key resistance level, ETH consolidates between the 50-day and 100-day Exponential Moving Averages.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.