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Stitch Fix Stock Bottoms Out After Flurry of Bear Notes

The retailer missed top- and bottom-estimates for its fourth quarter

Digital Content Manager
Sep 21, 2022 at 10:07 AM
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Stitch Fix Inc (NASDAQ:SFIX) entered the confessional after yesterday's close to report wider-than-expected fourth-quarter losses of 64 cents per share, and a revenue miss of $481.90 million. The company blamed the current macroeconomic environment and the impact it has had on retail spending. Plus, its 2023 guidance missed analysts' estimates.

In response, Canaccord Genuity downgraded the equity to "hold" from "buy," and slashed its price objective to $7 from $12. At least 10 other analysts cut their price targets on SFIX as well, which is noteworthy given the brokerage bunch was already pessimistic coming into today, with 16 of the 17 firms in coverage sporting a "hold" or worse rating. 

Short sellers are piling on the equity, too, with short interest up 10.5% in the last two reporting periods. The 18.81 million shares sold short represent 24.4% of the stock's available float, or nearly one week's worth of pent-up buying power.

It has been a rough year for Stitch Fix stock thus far, which was last seen down 6.4% at a fresh record low of $4.42. The shares lost support at their 20-day moving average after a late August bear gap, with the trendline rejecting a rally just last week. Longer term, SFIX is down 86.7% in the last 12 months.

The equity is getting blasted in the option today, with 3,117 calls and 6,027 puts across the tape so far, which is 11 times the volume that is typically seen at this point. Most popular is the weekly 9/23 4-strike put, followed by the 3.50-strike put in the same series.


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