IPO of the Week: Stitch Fix

Josef Schuster
Dr. Josef Schuster is the founder of Chicago-based IPOX Schuster LLC and chief architect of the IPOX® Indexes. The IPOX methodology is implemented in an IPO and spin-off strategy at Catalyst Funds. Before founding IPOX, Dr. Schuster pursued his academic work on European IPOs in the Financial Markets Group (FMG) at the London School of Economics (LSE), where he completed his MSc and PhD and conceived the idea to start IPOX. He regularly appears in the media as an expert in global New Listings and respective investment products.

Company Description

Stitch Fix

Founded in 2011 as Rack Habit Inc, Stitch Fix is a San Francisco-based online personal styling retailer. As an eCommerce company, Stitch Fix combines data science and human judgment to deliver periodic or on-demand personalized merchandise subscription box (Fix).

Business Model

Stitch Fix generates revenue from the sale of merchandise in the Fix. The company charged a nonrefundable upfront styling fee and only recognized it as revenue if none of the items within the Fix were purchased. Stitch Fix also charge an annual fee for unlimited styling if desired.

IPO History

On 11/17/2017, Stitch Fix shares debut on Nasdaq led by Goldman Sachs and J.P. Morgan. The fashion tech company raised $120 million after pricing at $15.00, below its original expected range of $18.00 – $20.00/share and downsized the number of shares from 10 million to 8 million. With a 15% over-allotment option fully exercised, Stitch Fix was valued at $1.45 billion at offer. The stock opened at $16.90/share, a 12.67% pop, and tumbled down to close the first day with a 1% initial return. Stitch Fix was included in the IPOX® 100 U.S. Portfolio on 12/15/2017 and currently weighs approximately 0.29% of the portfolio.

Historical Performance

Growth Outlook

Financials

Company

Stock

Symbol

IPO/Spin-off

Date

Initial
Return

Offer to Date

2019

YTD

Beta to S&P

EPS

2018

Revenue

(in millions)

2018 Net Income

(in millions)

P/S
ratio

Stitch Fix

SFIX US

11/17/2017

1.00%

77.53%

55.82%

1.60

$0.34

1,226.50

$44.90

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