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

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

AUD/USD falls to near 0.7100 after slipping below 50-day EMA

AUD/USD depreciates after registering minor gains in the previous day, trading around 0.7120 during the Asian hours. The technical analysis of the daily chart shows the pair consolidating sideways within a rectangle pattern, as neither bulls nor bears gain control. The AUD/USD pair is holding a slight bearish tone however as it sits beneath both the nine-day and 50-day EMAs.

160.00: USD/JPY back near intervention territory after upbeat US jobs report

US Nonfarm Payrolls beat expectations by a wide margin in May, with 172K jobs added. The US Dollar rebounds after the release, helping USD/JPY recover from its intraday lows. Warnings from Japanese authorities continue to limit upside potential near the 160.00 threshold.

Gold targets $4,300 amid stronger Dollar

Gold faces increasing selling interest and navigates the area of three-month lows near the $4,300 mark per troy ounce on Friday. The precious metal’s decline comes as traders assess the stronger-than-expected NFP, while the bid bias in the Greenback and higher US Treasury yields also collaborate with the retracement.

Cardano hits five-year low even as Hoskinson clarifies "break" isn't an exit

Cardano (ADA) price is down 10% at press time on Friday, extending losses over 30% so far this week amid Charles Hoskinson's clarification that "break" isn't an exit.

Week ahead – Fed countdown begins amid US inflation data and geopolitical risks

Fed Chair Warsh’s first meeting approaches as key US inflation data could reshape expectations. Oil prices remain elevated as US-Iran talks continue; tariffs also return to the spotlight. ECB is expected to hike; will it be a one-off move or is July live?

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.