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What’s Hurting Stitch Fix (NASDAQ:SFIX) Stock?

Story Highlights

Stitch Fix closed 7.2% lower on November 28. The stock has lost over 79% of its value in 2022.

Stitch Fix (NASDAQ:SFIX) stock closed 7.2% lower on November 28. While there was no company-specific news, a broader market selloff following a senior Fed official’s comment about the inflation fight continuing until 2024 and China worries weighed on SFIX. The company offers online personal shopping and styling services.

It’s worth highlighting that SFIX stock has lost over 79% of its value in 2022. Much of this decline followed Apple’s (NASDAQ:AAPL) privacy changes that negatively impacted its traffic and customer acquisitions. Moreover, the weak economic environment, inventory issues, and margin headwinds remained a drag.

SFIX’s CEO, Elizabeth Spaulding, said during the Q4 conference call that the weak macro environment and “its impact on retail spending has been a challenge to navigate.” 

Is SFIX a Buy, Sell, or Hold?

On TipRanks, SFIX stock has a Hold consensus rating based on 13 Buy and one Sell recommendations. Moreover, due to the correction in its price, analysts’ average price target of $5.22 reflects 35.2% upside potential. 

While analysts remain sidelined, hedge funds sold 3.4M SFIX stock last quarter. Meanwhile, SFIX stock carries an Underperform Smart Score of one out of 10 on TipRanks.

Though the company is taking measures to reduce inventory and focusing on recovering losses, inventory levels are expected to remain elevated in the first half of its Fiscal year 2023. Also, tightening product margins amid high inflation and competition from national brands could continue to pressure the bottom line. 

Stitch Fix also assumes that its net active clients will be down quarter-over-quarter, impacting its near-term growth. 

Disclosure

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