Please ensure Javascript is enabled for purposes of website accessibility

Why Stitch Fix Stock Was Falling Today

By Jeremy Bowman - Mar 9, 2020 at 12:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors seemed particularly antsy about the apparel company's earnings report, on deck for tonight.

What happened

Shares of personalized online styling service Stitch Fix (SFIX 3.62%) took a dive today as part of the broad market crash. Though there was no specific news out on the company, Stitch Fix is scheduled to report second-quarter earnings after hours today, and investors may be especially nervous about the report given the tumult in the market over the coronavirus scare.

As of 11:11 a.m. EDT, Stitch Fix shares were down 9% after falling as much as 13.5% earlier in the session. Meanwhile, the S&P 500 was down 6%.

A woman looking at her Stitch Fix style card

Image source: Stitch Fix.

So what

Today's sell-off in the stock market was triggered by ongoing fears about the spread of coronavirus and a crash in the oil markets as Russia and Saudi Arabia appear to be engaged in a price war that has sent the price of oil plummeting.

Stitch Fix has no exposure to the oil markets, and as an e-commerce company could even benefit from falling oil prices, which lower shipping costs, so it was a bit odd to see the stock falling by as much as double digits today. Like other retailers, Stitch Fix relies on China for a substantial percentage of its manufacturing. However, the real reason the stock is falling faster than the broad market today as well as over the past two weeks may be that investors have largely backed away from apparel retailers, as they seem to believe Americans will put off discretionary purchases like clothing in favor of necessities like food and medicine in the face of an extended outbreak. Already chains like Costco have seen a run on goods as consumers stock up on items they would need for a potential quarantine.

Now what

Though Stitch Fix would likely suffer in the event of a recession, the company seems well positioned for a "stay-at-home" economy, as consumers who may be unwilling to visit crowded stores will be more likely to shop online. The outbreak could provide a tailwind for the company.

The stock has a tendency to swing big on its earnings report, and with the market a wreck over the coronavirus, investors should expect a big move one way or the other. Analysts are looking for revenue to have increased 22.2% to $452.3 million and for earnings per share to come in at $0.06, down from $0.12.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

StitchFix Stock Quote
$8.59 (3.62%) $0.30
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$470.76 (1.24%) $5.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.