What happened

Shares of apparel e-commerce company Stitch Fix (SFIX 2.36%) skyrocketed 67.5% in January, according to data provided by S&P Global Market Intelligence. And the rise hasn't stopped there. As of 2 p.m. ET on February 2, Stitch Fix is now up 92% year to date -- quite surprising considering that there have been few fundamental developments so far this year.

So what

Stitch Fix decided to start 2023 off on a new foot. On January 5, the company announced that CEO Elizabeth Spaulding was stepping down after fewer than two years on the job. Spaulding officially took over on August 1, 2021. And while it wouldn't be fair to blame Stitch Fix's performance solely on her, the stock was down 94% since the time she took over through the end of 2022.

Spaulding was tasked with replacing founder Katrina Lake on the strength of her experience as president of Stitch Fix and her visions of expanding the company's product offerings. However, the clothing e-tailer has lost clients, and revenue has fallen at an alarming pace in recent quarters.

With Spaulding out, Lake is stepping back in temporarily. And her first task as interim CEO wasn't pleasant. On her first day back, Stitch Fix let go 20% of its salaried workers -- a necessary restructuring due to the business's lackluster financial performance.

In summary, it wasn't necessarily a great month for Stitch Fix. But the stock has rallied as investor appetite for risk appears to be growing.

Now what

According to data from Nasdaq, roughly 14.9 million shares of Stitch Fix were sold short as of January 15, up from fewer than 13.4 million shares sold short to end 2022. As a reminder, short selling is a bet that the stock will go down.

About 21% of Stitch Fix stock's float is sold short, according to Yahoo! Finance, which is quite high. And here in 2023, investors seem to be buying these kinds of stocks aggressively in order to induce a short squeeze.

Whether it's coordinated or not, I have no opinion. But a number of stocks that are up as much as or more than Stitch Fix in 2023 have high percentages of their floats sold short.

These are the kinds of gains that can quickly evaporate for Stitch Fix and others. Over the longer term, Lake will need to stabilize the business and find a successor who's up to the task of reinvigorating growth.