Stitch Fix: Too Prudent For Its Own Good

 

  • Stitch Fix disappointed the market with a big cut to FY22 guidance.
  • The company cut back on marketing, while fixing an onboarding issue with their new Freestyle product.
  • The stock is far too cheap at less than 1x FY22 sales targets despite the potential to return to 10%+ growth.
  • This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »
Some of the issues hitting Stitch Fix (NASDAQ:SFIX) are self inflicted. The company remains in the early innings of growth, yet the online personalized shopping service pulls back from aggressively marketing the service regularly due to the holidays and to refine their new products. My investment thesis remains ultra Bullish on this stock after the massive dip from the meme stock peak earlier this year.

Read the full article on Seeking Alpha. 

Disclosure: Long SFIX. Please review the disclaimer page for more details. 


Update - Jan. 6

The stock is so cheap that a $150 million share buybacks makes sense. The company has a cash balance of $400 million, but Stitch Fix is best focused on investing in growth. 

  • Stitch Fix (NASDAQ:SFIX) is up 2.16% in pre-market trading after announcing a share repurchase program to buyback up to $150M of its Class A common stock.
  • As of October 30, 2021, the company had 83,193,536 shares of Class A common stock and 25,601,420 shares of Class B common stock outstanding.
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