Target shares jumped as much as 6.7% on Friday after the Financial Times reported that activist hedge fund Toms Capital Investment Management has taken a significant stake in the retailer. The investment comes as Target struggles through its worst year since the pandemic, with shares down 27% in 2025 and more than 60% from pandemic-era highs.

The Activist Arrives

Key details from the Financial Times report:

  • Investor: Toms Capital Investment Management
  • Stake size: Described as "significant" but undisclosed
  • Target market cap: Approximately $43.7 billion
  • Timing: Investment built over recent months

Toms Capital, founded in 2017 by former GLG Partners executives, has a track record of activist investments. Earlier this year, the hedge fund built a stake in Kenvue before its $40 billion sale to Kimberly-Clark.

Why Target Attracts Activist Attention

Target's struggles have made it a tempting activist target:

Prolonged sales slump: The company has posted three consecutive quarters of falling comparable sales—the first such streak since 2016. Consumer traffic has shifted to competitors offering lower prices or greater convenience.

Massive valuation decline: Target shares traded above $250 during the pandemic shopping boom. Today they trade near $120—a 50%+ decline that has left the stock trading at just 12 times forward earnings.

Market share losses: Walmart has gained share by emphasizing low prices and fast delivery. Amazon continues taking e-commerce market share. Target has been squeezed in the middle.

Strategic questions: Investors have questioned Target's category mix, store investment priorities, and digital strategy. An activist could push for changes.

Target's Response

In response to the reports, Target offered a measured statement:

"Target maintains regular dialogue with the investment community. Our top priority is getting back to growth by delivering great value and a differentiated shopping experience for our guests."

The company did not confirm or deny the Toms Capital investment.

Leadership Transition

The activist pressure comes during a leadership transition:

  • Outgoing CEO: Brian Cornell departing
  • Incoming CEO: Michael Fiddelke takes over in February 2026
  • Investment plans: Fiddelke has outlined $5 billion in 2026 spending on store renovations, product refreshes, and digital improvements

Fiddelke, a longtime Target executive who has served as CFO, represents continuity rather than radical change. An activist could push for a different approach.

What Toms Capital Might Push For

Based on typical activist playbooks, Toms Capital could advocate for:

Cost cutting: Target's operating margins have compressed. An activist might push for greater efficiency.

Capital allocation changes: The $5 billion investment plan could be questioned. More aggressive share buybacks or dividend increases might be demanded.

Strategic review: In extreme cases, activists push for spinoffs or sales. Target's private-label brands or real estate holdings could be attractive candidates.

Board changes: Activists often seek board seats to influence strategy directly.

Target vs. Walmart: The Gap Widens

Target's struggles contrast sharply with rival Walmart's strength:

  • Walmart 2025 performance: Stock up approximately 40%
  • Target 2025 performance: Stock down 27%
  • Walmart comparable sales: Consistently positive
  • Target comparable sales: Three straight negative quarters

Walmart's focus on everyday low prices and grocery—a traffic driver—has resonated with inflation-weary consumers. Target's more discretionary merchandise mix has suffered as shoppers prioritize essentials.

The Bull Case for Target

Despite the challenges, Target bulls see value:

  • Valuation: At 12x forward earnings, bad news is largely priced in
  • Real estate: Owns valuable store locations in desirable markets
  • Brand strength: Target's private labels remain popular
  • Turnaround potential: New leadership and activist pressure could catalyze improvements

The Bear Case

Bears counter that:

  • Structural challenges: Target's competitive position may be permanently weakened
  • Consumer trends: Bifurcated spending favors discount (Walmart) and luxury (not Target)
  • E-commerce gap: Target lags Amazon and Walmart in digital capabilities
  • Tariff risk: Heavy import exposure creates margin pressure

Technical Picture

Friday's rally improved the technical outlook:

  • Stock broke above its 20-day moving average
  • Volume surged on the activist news
  • Next resistance at $135 (50-day moving average)
  • Support established near $115

The Bottom Line

Toms Capital's stake in Target adds a new dynamic to the retailer's turnaround story. The activist's track record—including a profitable investment in Kenvue—suggests serious intentions. For Target shareholders, the development offers hope that outside pressure could accelerate improvements. However, activists aren't miracle workers; Target's fundamental challenges—market share losses, consumer spending shifts, and competitive pressures—won't disappear overnight. The coming months will reveal whether Toms Capital seeks behind-the-scenes influence or a more public campaign. Either way, Target just became a more interesting story.