Target Corporation (TGT): A Bear Case Theory

We came across a bearish thesis on Target Corporation (TGT) on wallstreetbets Subreddit Page by maparo. In this article, we will summarize the bears’ thesis on TGT. Target Corporation (TGT)'s share was trading at $92.15 as of April 23^rd. TGT’s trailing and forward P/E were 10.40 and 10.15 respectively according to Yahoo Finance.

Target is facing a multi-front crisis that’s pressuring its business model, weakening its financials, and eroding investor confidence. Consumer spending is down, foot traffic has declined for ten straight weeks, and full-year 2024 sales and earnings both slipped slightly from 2023, signaling a concerning stagnation. While Q4 revenue of $30.92B barely beat expectations, EPS dropped to $8.86 from $8.94, and the stock is already down 20% year-over-year. With no clear turnaround in sight, flat growth is effectively negative in today’s macro climate.

The company’s recent DEI backpedal alienated both progressive and conservative shoppers, compounding a deeper identity crisis. Once positioned as a stylish, affordable alternative to big-box rivals, Target is now caught in the middle—less competitive than Walmart on price, less convenient than Amazon online, and less trusted than Costco during economic downturns. Even its once-promising online and curbside channels are underperforming in the current environment.

Now, tariffs are about to exacerbate the pressure. With Trump’s proposed trade policies poised to hit imports from China, Mexico, and Canada, Target must either raise prices—risking consumer backlash—or absorb the costs, which will squeeze already fragile margins. Leadership is openly admitting that consumer spending is “soft,” and with Q1 2025 GDP forecasts in negative territory, recessionary headwinds are gathering strength.

Put simply, Target is being outflanked. Its pricing isn’t sharp enough, its differentiation is fading, and its core customers are either cutting back or defecting to rivals. The setup is ideal for a bearish trade: long-dated puts, particularly Jan 2026 $70 and $65 strikes, offer an asymmetric risk/reward. Volatility remains reasonable, and if the stock breaks below $90 again, technical support could collapse. This is more than short-term weakness—it’s a structural unraveling of Target’s brand and business model.

Target Corporation (TGT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held TGT at the end of the fourth quarter which was 49 in the previous quarter. While we acknowledge the risk and potential of TGT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TGT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.