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Why Stitch Fix's Shares Popped 18.3% on Tuesday

By Travis Hoium - Jan 12, 2021 at 5:54PM

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Another volatile day for Stitch Fix.

What happened 

Shares of online clothing retailer Stitch Fix ( SFIX 7.16% ) jumped as much as 18.5% in trading Tuesday on very little news. Shares closed near their high, up 18.3% for the day. 

So what

Sometimes, no news is good news, and that seems to be the case for Stitch Fix today. The company didn't announce any press releases or financial information, so what's driving the stock? 

A handbag, shoes, and other fashion items on display.

Image source: Getty Images.

Sometimes momentum gets behind a stock and drives it higher for seemingly no reason. That seems to be the case today, but it also should be put into some context. Shares jumped in early December only to fall late in the month and now have jumped again in early January. The volatile ride doesn't seem to end for this online retail stock

SFIX Chart

SFIX data by YCharts

Now what

You shouldn't take much away from today's move other than this is a normal day for a volatile stock. As investors, we never know when shares are going to jump or plunge, and that's why we focus on the long-term trends. For Stitch Fix, revenue is rising with a recently reported 10% increase in fiscal first quarter of 2021 revenue to $490 million. On the stock side, shares are up 188% over the past year. Both are great trends. As long as revenue growth continues, this is a stock to hold onto long term. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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