SFIX buy the dip and hold for a couple quarters
Stitch Fix is down over 8% after hours. It beat analyst earnings estimates by 75%, although it slightly missed analyst estimates of revenue and customer growth (an almost negligible difference). The midpoint of its earnings guidance for 2020 was slightly above analyst estimates (again, an almost negligible difference).
The reason Stitch Fix is down is that on the conference call, the company CEO predicted a "soft" start in Q1 2020. Stitch Fix's marketing team noticed that summer is their strongest season, so they spent less capital marketing for the winter. To me this sounds like smart and efficient capital allocation, especially given Stitch Fix's steep marketing costs. In the short term, however, it means that Stitch Fix's stock price could languish this winter, and then recover in the spring and summer.
A couple thoughts. First, Stitch Fix has short-term support around 18.24, and I think tomorrow it will rally on the strength of its earnings beat. So this could be a great one-day swing trade if you can get an entry near the support level. Mid-term the price could fall as low as $15 per share during the slow winter season, which would be a great price to buy and hold for a couple quarters to benefit from the seasonal upswing in summer.
For free news analysis and educational videos, check out my new beginner investing channel on YouTube, "Wall Street Petting Zoo!"
The reason Stitch Fix is down is that on the conference call, the company CEO predicted a "soft" start in Q1 2020. Stitch Fix's marketing team noticed that summer is their strongest season, so they spent less capital marketing for the winter. To me this sounds like smart and efficient capital allocation, especially given Stitch Fix's steep marketing costs. In the short term, however, it means that Stitch Fix's stock price could languish this winter, and then recover in the spring and summer.
A couple thoughts. First, Stitch Fix has short-term support around 18.24, and I think tomorrow it will rally on the strength of its earnings beat. So this could be a great one-day swing trade if you can get an entry near the support level. Mid-term the price could fall as low as $15 per share during the slow winter season, which would be a great price to buy and hold for a couple quarters to benefit from the seasonal upswing in summer.
For free news analysis and educational videos, check out my new beginner investing channel on YouTube, "Wall Street Petting Zoo!"
Comment:
Several analyst firms reduced their price targets on Stitch Fix after the earnings report, so this proved to be just a break-even trade with an 18.24 entry. (I did pick up some more shares at 17, so I did slightly better than break-even on this trade.)
Comment:
I still plan to re-renter around 15 for the mid-term hold.