The Real Reason Stitch Fix Stock Is Soaring
It's been a wild ride for the popular styling service and its shareholders. After posting steady growth in recent years, Stitch Fix (NASDAQ: SFIX) started to bleed clients last year, which coincided with rising inflation, interest rates, and the sell-off in stocks. The latest financial results still show the business struggling to find its footing, with revenue down 20% year over year.
Nonetheless, the stock price jumped about 30% following the report last week. The company demonstrated great progress in shoring up profitability and reported positive free cash flow of $21 million, but company guidance calls for another steep decline in revenue next quarter.
While it was a great sign to see the business return to positive free cash flow, I don't think that's why the stock was soaring following the earnings news. The real reason the stock is soaring is that Stitch Fix could be viewed as an under-the-radar play on artificial intelligence (AI) in the apparel industry. Here's why.
Source Fool.com
