Stitch Fix Stock Price Forecast: Can This Sinking Ship be Fixed?

Stitch Fix stock price had a difficult week as the fashion-tech company published a weak quarter and forward guidance. SFIX share price crashed to an all-time low of $4, which was about 96% below its all-time high. Its total market cap has crashed to an all-time low of $566 million.

Why did SFIX crash?

Stitch Fix is a technology company that aims to provide quality outfits for men, women, and children in an easy process. Subscribers receive a basket of clothes every month, select the ones they love, pay for them, and return the rest. The company uses complex artificial intelligence technology to select these clothes. 

Stitch Fix is facing a dire situation as America’s inflation rises. Recent data shows that the headline consumer inflation surged to a four-decade high as the cost of most items rose. Therefore, with inflation rising, spending on discretionary products like subscriptions has gone down. 

Another challenge that Stitch Fix is facing is the strong US dollar. The dollar index surged to a multi-decade high of $112 as currencies like euro and sterling crashed. As such, the company is now paying more for its imports.

On Thursday, StitchFix said that its revenue dropped by 15.6% in Q4 to $481 million. It also reported a wider-than-expected loss. Its adjusted EBITDA was a loss of $31.8 million. For its full-year, revenue crashed by 1% to $2.1 billion. In a statement, the company’s CEO said that:

“We’re focused on net active client growth by broadening our marketing portfolio, refining the on-boarding experience to capture both new and prospective clients, and targeting strategies that reengage previously active clients.”

Stitch Fix stock price forecast

Stitch Fix stock price

The daily chart shows that the Stitch Fix stock price has been in a bearish trend in the past few months as demand for its product ease. Like other tech companies like Affirm, Stitch Fix is struggling as the transition from lockdown stocks continues.

The shares have crashed below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved close to the oversold level. At the same time, the stock has managed to move below the important support level at $4.67. 

Therefore, there is a likelihood that the Stitch Fix share price will continue falling as sellers target the next key support level at $3.

Leave a Reply

Your email address will not be published.