Stitch Fix, Inc. (SFIX)
From Cabot Stock of the Week
Updated from Wall Street’s Best Investments 807, July 18, 2018
Stitch Fix, Inc. (SFIX), originally recommended by Mike Cintolo in Cabot Top Ten Trader, reported its fiscal fourth-quarter results yesterday after the close. Revenues were $318 million, just short of analysts’ estimates, while earnings per share topped analysts’ consensus of $0.04. But the stock sold off sharply because the number of active clients, which was expected to hit 2.8 million, stagnated at 2.7 million, raising fears that the company was having trouble holding onto its core customer base—and also fears that Amazon’s new competing service will cut into the market. News that the company would expand into the U.K. by the end of the year was not reason enough for many traders to stay. So what comes next? Probably a short-term bounce, as early as tomorrow. And probably a base in the 27 region, which is not only where the stock found support two months ago but also where the stock’s 200-day moving average will be very soon. But there probably won’t be a new uptrend for many months. And for that reason, I’ll sell now. SELL.
Timothy Lutts, Cabot Stock of the Week, www.cabotwealth.com, 978-745-5532, October 2, 2018