Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Stitch Fix Are Up Today

By John Rosevear - Mar 19, 2020 at 3:37PM

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

Last week's "disappointing" guidance now looks pretty good.

What happened

Shares of Stitch Fix (SFIX 1.08%) were moving up on Thursday afternoon, as investors looking for retail bargains began snapping up the company's beaten-down shares. 

As of 3:30 p.m. EDT, Stitch Fix's shares were up about 14% from Wednesday's closing price. 

So what

Stitch Fix's shares have had a rough week and a half. Shares fell sharply after the company's earnings report on March 9, as revenue and guidance both fell short of Wall Street's expectations. 

A woman carrying a Stitch Fix box.

Image source: Stitch Fix.

But what looked bad a week and a half ago doesn't look quite so bad now. Shares of brick-and-mortar retailers have been hammered in recent days as investors have come to terms with the disruptions caused by the coronavirus pandemic. 

As consumers heeded health authorities' advice to stay home, retail store traffic fell sharply in the first half of March -- and now many apparel stores have shut their doors for at least the next few weeks.

What does that have to do with Stitch Fix? 

Now what

First of all, the company's guidance now looks pretty good in light of what seems likely to happen with its brick-and-mortar competitors. Second, the thinking is that consumers stuck at home for the duration might give Stitch Fix's offerings a try. It's possible that the company could gain sales during the pandemic. 

Long story short: Last week's disappointing guidance might be next quarter's upbeat surprise. 

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
StitchFix
SFIX
$8.39 (1.08%) $0.09

*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
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

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.