Stitch Fix (SFIX.US) shares soar 44% to record high, focus on whether high valuation can be sustained

Stitch Fix (SFIX.US) shares hit a two-year high as the company updated its apparel offerings and improved customer experience, boosting its earnings outlook. The positive news sent Stitch Fix's stock up more than 44% at the close of trading, marking the best day in the stock's history. Matt Bell, the company's CEO, said on the earnings call that Stitch Fix expects revenue to resume growth by the end of fiscal 2026 and is currently on a path to a successful transformation.

Stitch Fix successfully increased customer visits through improved inventory management and personalized marketing strategies, narrowing its third-quarter loss per share to $0.05, topping Wall Street's expectation of $0.09, while its revenue expectations for 2025 also exceeded market expectations. The stock's rise also boosted its competitors, The RealReal (REAL.US), ThredUp (TDUP.US), and Revolve (RVLV.US).

Despite the significant gains on Wednesday, Stitch Fix's stock may face pressure to give back some of its gains on Thursday, considering its high valuation relative to free cash flow and ongoing risks from competitors such as Amazon. Seeking Alpha analyst Michael Wiggins de Oliveira gave Stitch Fix a neutral rating, noting the company's high operating costs and changing customer acquisition dynamics, while also acknowledging its positive aspects, such as its lack of debt and holding approximately $250 million in cash, or 30% of its market value.