Stitch Fix Stock Price Collapses 30% On Sales Miss

Shares of Stitch Fix are trading around 30% lower after the personal styling service reported a revenue that missed analysts’ estimates for the company’s second fiscal quarter, as well as a pessimistic outlook for 2020. Stock price trades at record lows below the $15 handle.

Fundamental analysis: Earnings beat, forward guidance disappoints

The California-based company reported adjusted earnings per share of $0.11, higher than the $0.06 expected by Wall Street analysts. Reported revenue slightly missed market’s expectations by coming in at $451.8 million vs. $452.5 million expected.

The investors probably won’t agree with Lake’s assessment of a “strong quarter” despite the earnings beat given that the net income fell to $11.4 million from $12 million last year.

Moreover, the company said it expects the net revenue for fiscal 2020 to come in the region of $1.81 billion and $1.84 billion, again lower than the $1.92 billion expected from the analysts.

In a more positive manner, Lake reported that the number of active clients has increased by 17% year over year to 3.5 million.

Technical analysis: Record lows

As seen in the chart below, the stock price has reacted extremely negatively to the latest earnings report from Stitch Fix. It gapped around 30% lower to print the lowest levels since the company went public in 2017.

A low of $14.28 has now created a new benchmark for the bears. Any further attempts to move lower are likely to depend on the overall state of the stock market. A $13.64 level is likely to become the next target for the bears on the downside.

Looking higher, the bulls need a close above the $17 - $18 range to put themselves in a better position for the rest of the year.

Summary

Shares of Stitch Fix, a personal styling service, trade 30% lower today after the company released the latest earnings report, which is a mixed bag of data. However, the investors were disappointed with a forward guidance for 2020 that fell below Wall Street estimates, which ultimately pushed the price to record lows.