Why Stitch Fix (SFIX) Shares Are Sliding Today
What Happened?
Shares of personalized clothing company Stitch Fix (NASDAQ:SFIX) fell 36.4% in the afternoon session after the company reported second-quarter earnings results. Its full-year revenue guidance and EPS fell short of Wall Street's estimates. Additionally, its active clients were down 613,000 year on year.
Overall, this was a weaker quarter. It is important to note that the business is in the midst of a transformation: notably, it ceased operating in the U.K. market at the beginning of fiscal 2024. This move translates to a reduced footprint and demand for its offerings in the region, as it directly sells to fewer prospects.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Stitch Fix’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. Stitch Fix’s shares are very volatile and have had 65 moves greater than 5% over the last year. But moves this big are rare even for Stitch Fix and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock gained 36.5% on the news that the company announced first-quarter results that blew past analysts' revenue and adjusted EBITDA expectations. Guidance also came in strong as its full-year revenue and adjusted EBITDA guidance came in higher than Wall Street's estimates.
On the other hand, its number of active clients unfortunately missed. Despite the decline in customers, sales benefitted from improved monetization as net revenue per active client came in at $525, up 2% year-over-year. Zooming out, we think this was an impressive quarter that should delight shareholders.
Stitch Fix is down 34.1% since the beginning of the year, and at $2.37 per share, it is trading 52.7% below its 52-week high of $5 from July 2024. Investors who bought $1,000 worth of Stitch Fix’s shares 5 years ago would now be looking at an investment worth $126.27.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
