NEW YORK – American Eagle Outfitters shares jumped the most since 2000 on Aug 4 after United States President Donald Trump touted the company’s ads – pushing the retailer’s stock into meme stock territory. 

The shares spiked 24 per cent on Aug 4 after Mr Trump said in a social media post that American Eagle’s recent marketing blitz with American actress Sydney Sweeney, 27, is the “HOTTEST ad out there.” He said American Eagle jeans are “flying off the shelves”. 

It is not yet clear whether the ad campaign – which controversially celebrates Sweeney’s genetic traits as well as her jeans – is actually convincing shoppers to buy the company’s apparel.

Analysts say the real test will be how American Eagle performs during the crucial back-to-school season as consumers begin to stock up on jeans and other autumn essentials. 

So while Mr Trump’s comments on Aug 4 do not reveal any new information about the company’s performance, they do add to the hype around American Eagle shares. And that has drawn investors betting on the hype itself – a telltale sign of a meme stock. 

“What are meme stocks for the most part? Individual investors chasing after the hottest stock,” said Mr Matt Maley, chief market strategy at Miller Tabak & Co. 

The move on Aug 4 pared the stock’s year-to-date decline to 20 per cent. The company has been battered by sluggish demand and last quarter, it registered a US$75 million (S$96 million) charge related to a writedown of its spring and summer merchandise. 

Some traders who drove up the shares on Aug 4 are probably betting that the spotlight on the company will translate into greater sales. 

But that alone does not explain the magnitude of the share move, Mr Maley said, adding that American Eagle executives should seize on the interest by, for example, issuing more shares. Meme stock darlings AMC Entertainment Holdings and GameStop have done this in the past.