What Happened?
Shares of personalized clothing company Stitch Fix (NASDAQ: SFIX) jumped 9.9% in the morning session after the company reported better-than-expected third-quarter results and raised its full-year revenue forecast.
The online personal styling service posted revenue of $342.1 million, a 7.3% increase from the previous year, which surpassed Wall Street's expectations. This revenue growth was achieved despite a year-on-year decline in active clients, indicating that the company's monetization per customer has risen. The company also provided an optimistic outlook, lifting its revenue guidance for the full year to $1.34 billion at the midpoint. Additionally, its revenue forecast for the upcoming quarter came in 9.6% above what analysts were expecting.
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What Is The Market Telling Us
Stitch Fix’s shares are extremely volatile and have had 45 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 3.8% on the news that an analyst at Telsey Advisory Group reaffirmed a "Market Perform" rating on the stock during the previous trading session. This move extended a 4.1% jump from the prior day. While a "Market Perform" rating suggested the stock was expected to perform in line with the broader market, investors viewed the reaffirmation positively. Analyst Dana Telsey also kept the price target steady at $6.00 per share. The decision not to downgrade the stock or its price target may have provided a sense of stability and encouraged buying activity. The positive sentiment also came as the company prepared to release its quarterly earnings, which investors were eagerly awaiting.
Stitch Fix is up 20.5% since the beginning of the year, but at $5.27 per share, it is still trading 20.7% below its 52-week high of $6.64 from December 2024. Investors who bought $1,000 worth of Stitch Fix’s shares 5 years ago would now be looking at an investment worth $146.94.
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