Stitch Fix (NASDAQ:SFIX) rode the wave of e-commerce growth that accompanied the pandemic, soaring 128% in 2020. The stock's explosive growth continued into 2021, soaring as much as 80% before giving back some of its gains.
In this video clip from Motley Fool Live, recorded on Jan. 27, "The Wrap" host Jason Hall and Fool.com contributors Danny Vena and Brian Withers discuss Stitch Fix's epic run and whether it will continue.
Jason Hall: Stitch Fix, 88%. It's up 88% since the beginning of the year here. It's absolutely gone on a roll. It's just absolutely crushing it. Here's my question. Here's the over-under. We've got a share price today. Share price today is about $106 at the close. I want you to take the over or the under. Danny, I'm going to let you go first here. Is Stitch Fix stock going to finish the year over or under $106 a share? Again, this is pointless prognostication.
Danny Vena: Pointless prognostication. I'm going to say under. Now, mind you, I am a Stitch Fix shareholder, and I think that over the long term, 3-5-10 years, Stitch Fix will do just fine. However, when you're talking about an 88% run-up since the beginning of the year, and if you go back a month or two before that, it was actually running even before the beginning of this year. I would say that the fundamentals are going to need to catch up.
I was pleasantly surprised as were all Stitch Fix shareholders when the company reported earnings, things came out much better than expected. But for the stock to close higher than it is right now, at the end of this year it's going to have to execute, execute, execute, execute, and it's going to have to grow a lot more Fixers, Stitchers, [laughs] whatever they are. [laughs] Can you tell I'm not a customer? I'm a shareholder, not a customer.
Hall: There you go. But I don't think they sell the beautiful shirts that you regularly robe yourself in, which is their loss. But Danny, it's their loss.
Vena: I've got Hilo Hattie for that. [laughs]
Hall: Brian Withers, another Stitch Fix owner. I'm pretty sure you still own Stitch Fix shares.
Brian Withers: I do.
Hall: What's your take here? You're taking the over or under at the end of the year? Shares going to trade at the end of the year, higher or lower than $106 per share we see today?
Withers: I think it could be higher, and I think to Danny's point, not to diminish anything that he said, what he said was spot on. They got to execute. There's a lot of things that have got to go right, but they got some momentum.
The other piece about Stitch Fix is, I always felt like they were the Rodney Dangerfield of the clothing industry. Folks who don't know who Rodney Dangerfield is, he was a comedian, who always started his gigs as, "I don't get no respect."
Hall: "I don't get no respect." Yeah.
Withers: "I don't get no respect." Katrina Lake [CEO], talked a lot about her company has always been underestimated and she loves that actually. She thrives on it.
There's a number of things that could go right for Stitch Fix this year. We were talking about the increase in vaccinations, and if we're back to normal in summer to mid- to late summer, and Stitch Fix figures out how to ramp up the things people need or even get cool gift cards for Christmas, their fourth quarter could be pretty rocking and there could be a lot more Stitch Fixers or clients exiting this year.
Hall: Did you just say that investors should go long Levi Strauss & Co. (NYSE:LEVI) because people are about to be buying a whole bunch of pants? [laughs].
Withers: There you go.
Hall: Yeah. You know where I stand on this. I've been bearish on the company, because it is a hard industry, it's tough to make good margins consistently. Fashion is challenging. Even the best companies struggle in it. I'm pulling for the company, I'm just not willing to invest. I'm going to take the under here. No surprise. I know Brian Withers is not surprised.
Withers: I knew I'd be the only one if Danny took the under so.
Hall: Again, I hope it's higher. Like I said, I'm pulling for the company. Not my cup of tea. Not my style of dresses, maybe that's what it is. [laughs]