Quantcast

Why Stitch Fix Stock Dropped 37.5% in December


What happened

Shares of Stitch Fix (NASDAQ: SFIX)  fell 37.5% in December, according to data from S&P Global Market Intelligence , after the personal styling specialist announced strong quarterly results but left investors worried with lower-than-expected active user growth.

But Stitch Fix's drop wasn't a straight line. The stock first plunged more than 20% on Dec. 11, 2018, after Stitch Fix's fiscal first-quarter 2019 report hit the wires, then rebounded the following day as some investors scooped it up on the pullback, before finally continued to slide along with the broader market in the subsequent weeks.

Stock market chart in black and white with a yellow arrow indicating losses

IMAGE SOURCE: GETTY IMAGES.

So what

Make no mistake, Stitch Fix's headline numbers were strong. Revenue climbed 24% year over year to $366.2 million, while adjusted earnings per share soared 250% to $0.10. Analysts, on average, were modeling earnings of only $0.03 per share on revenue of $358 million.

However, Stitch Fix also told investors that its number of active clients increased 22% year over year, to 2.93 million, falling just barely short of Wall Street's models for 2.95 million.

Still, Stitch Fix COO Mike Smith insisted the company was "proud" of its performance, adding, "We continue to demonstrate our ability to deliver growth and exceptional client experiences across all of our categories."

Now what

The market may not have loved Stitch Fix's latest showing, but I lean toward agreeing that Stitch Fix had every right to boast about the continued strength of its underlying business. For patient, long-term investors, I believe the pullback should ultimately prove to be an attractive buying opportunity.

Find out why Stitch Fix is one of the 10 best stocks to buy now

Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. (In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the market!*)

Tom and David just revealed their ten top stock picks for investors to buy right now. Stitch Fix is on the list -- but there are nine others you may be overlooking.

Click here to get access to the full list!

*Stock Advisor returns as of November 14, 2018

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Stitch Fix. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Personal Finance , Stocks
Referenced Symbols: SFIX



More from Motley Fool

Subscribe






Motley Fool
Contributor:

Motley Fool

Market News, Investing










Research Brokers before you trade

Want to trade FX?