Stitch Fix Stock Rips Higher on Huge Q3 Report

Some options traders could be sitting on big SFIX paper profits

Jun 8, 2018 at 9:42 AM
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AI-driven fashion expert Stitch Fix Inc (NASDAQ:SFIX) blew Wall Street away last night with its fiscal third-quarter results. Earnings for the period topped expectations thanks to a 29% year-over-year increase in sales. The company also said the number of subscribers grew by 30% to roughly 2.7 million clients, and that it is launching a shopping platform specifically for children.

Brokerage firm RBC didn't try to hide its enthusiasm following the report, saying "Stitch Fix is revolutionizing fashion" while maintaining its $30 price target. Stifel also weighed in with a price-target increase to $26 from $25. This may not be the last round of bull notes we see for SFIX, since half the analysts in coverage still have just "hold" ratings.

As for options activity, most traders had been focusing on long calls. The front-month June 19 call saw the largest increase in open interest during the past 10 days, where data shows mostly buy-to-open activity. Meanwhile, more ambitious bulls were buying the June 27 call.

The stock is trading up 6.8% at $21, as it tries to surpass the 50-day moving average for the first time since mid-May. Shortly after going public back in November, Stitch Fix stock traded as high as $30.07 in late December, but has struggled to break out in 2018. An unwinding of short interest could help, however, as a whopping 21% of the float is sold short.


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