Stitch Fix Stock Cools Down Ahead of Tonight's Earnings Call

It has been a difficult year for SFIX, which is down over 39% in 2021

Digital Content Manager
Sep 21, 2021 at 2:41 PM
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Online shopping service and apparel e-tailer Stitch Fix Inc (NASDAQ:SFIX) is set to step into the earnings confessional after today's close to announce fiscal fourth-quarter earnings. The shares are cooling off ahead of the event, last seen down 1.9% at $35.69. Below, we will dive deeper into the stock's technical performance, as well some of its previous post-earnings activity. 

It has been a disappointing year so far for Stitch Fix stock. The security has more than halved since its Jan. 27, all-time high of $113.76 to hit a Sept. 15, annual low of $33.20. The 20-day moving average has been guiding shares lower since July, after the equity cooled from a rally to the $69 mark. Year-to-date, the stock has already shed 39.1%.

SFIX 20 Day

The past two years have not been the kindest to SFIX, either, which had negative post-earnings reactions in five of these eight next-day sessions, including a 28.2% drop back in March. Options traders are pricing in a 27.9% swing for the security this time around, which is higher than the 17.8% move Stitch Fix stock averaged after its last eight reports, regardless of direction. 

Analysts are mostly bearish, with eight of the 14 in question calling SFIX a tepid "hold" or worse. Shorts have been piling on the equity, too. Short interest jumped 13.7% in the last two reporting periods, and the 12.11 million shares sold short account for 17.5% of the stock's available float, which is nearly two weeks' worth of pent-up buying power.

The options pits are less pessimistic. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SFIX's 10-day call/put volume ratio of 4.09 sits higher than 91% of readings from the past year. This means calls have been picked up at a quicker-than-usual clip over the past two weeks.

That holds true today. So far, 18,000 calls and 8,494 puts have crossed the tape, which is four times what is typically seen at this point. The most popular is the weekly 9/24 40-strike call, followed by the 25-strike put in the same series, with positions being opened at both.

Also worth mentioning is SFIX's elevated score of 93 out of 100 on the Schaeffer's Volatility Scorecard (SVS). This suggests the equity has consistently realized higher volatility than the options market has priced in, making it a great premium-buying candidate.

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