Ahead of Stitch Fix earnings, Runnymede's Andy Wang and Wedbush's Tom Nikic discuss the prospects for a turnaround in the personal styling stock with Nicole Petallides, host of Trading 360.

Stitch Fix (SFIX)

  • 22% YTD return does not reflect fundamentals
  • Stock is beaten up but with limited turnaround prospects
  • $3.72 stock sitting on nearly $2 per share in cash
  • Could be an acquisition target but the AI story not supported by financial metrics

Stitch Fix is a stock that some investors and analysts thought would double from $76. Now it’s selling under $4 – down 97% from a peak of $113.

Bulls say it’s worth looking at SFIX as a speculative bet because the stock is selling at $3 3/4 and sitting on $2 per share in cash.

The problem here is that SFIX lacks a meaningful catalyst for a turnaround. The company has lost its way from its personal stylist clothing recommendations for female customers. It recently introduced its direct buy “Freestyle” program that diluted the company's niche offering so today it’s an e-tailer without a clear moat in a very competitive apparel category.

The company has been losing customers, and I do not see how the company can correct course.

Have you purchased from fashion e-tailer Stitch Fix?