Stitch Fix Shares Plummet More Than 11% Following Earnings Report

December 19, 2017, 10:22 PM UTC

Stitch Fix, the online styling service, saw shares plummet more than 11% despite beating analyst expectations on its first earnings report as a publicly traded company.

Stitch Fix reported Tuesday revenue rose 25% to $295.6 million, just slightly higher than analysts’ expectations of $295 million. Earnings were also 1 cent higher than expected at 4 cents a share.

The company reported net income was $13.5 million, or 4 cents a share, compared with earnings of $13.2 million, or 14 cents a share, a year ago.

Stitch Fix also reported its active client count grew 29.7%, or 549,000, to 2.4 million as of October 28, 2017.

Despite its earnings, Stitch Fix shares appear to be suffering from classic early IPO volatility. Investors might have reacted to a lack of an earnings forecast from the company, reports CNBC.

The stock rose nearly 4% Tuesday and then fell after the market closed. The company’s shares were up 63% since it made its debut Nov. 17.

Stitch Fix downsized its IPO last month, raising $120 million at a share of $15. The original guidance was between $18 and $20. Stitch closed its first day of trading at $15.15, just 1% above that downsized IPO price target. That gave the company a value of about $275 million as a private company a market capitalization of about $1.46 billion.

The initial public offering of Stitch Fix was viewed as something of a test for potential listings by other digital-first retailers, such as Warby Parker.

But some investors have expressed concern that Stitch Fix faces a threat in the long term from Amazon, which is testing a similar service called Prime Wardrobe.

Katrina Lake, founder and chief executive officer of Stitch Fix, is the first female CEO to take a tech company public this year.