Calling all fashionistas, stylists, dapper gentleman and IPO-fiends: Stitch Fix IPO is coming this week! With a few disappointing tech IPOs this year such as Snapchat and Blue Apron, many companies are holding off on going public. Stitch Fix thinks otherwise, and unlike many of their counterparts, their IPO is shaping up to be a successful one. In preparation, let’s cover precisely what Stitch Fix is and what Stitch Fix IPO means.
What is Stitch Fix and Stitch Fix IPO?
Stitch Fix gives their customers personal styling services through a simple, algorithm-based online platform. Customers enter their clothing size, budget, and style preferences and are sent five carefully-curated pieces to try. Keep what you love and return the rest at no charge.
It is targeted to busy Millennial men and women who don’t have the time or the stylish eye to find the right pieces for their closet. Unless you are a Kardashian or another celeb, personal styling services are unaffordable. Stitch Fix saw this problem and built a successful and scalable revenue model on top of it.
Why has it been so successful?
Their business model is simple. Fill out the preferences and you are matched with a stylish and charged a $20 styling fee. With an average cost of $55 per item, no wonder Stitch Fix is doing so well. It is affordable and solves a huge pain for its customers: confidently picking out fashionable pieces. Stitch Fix also didn’t scale too quickly or stockpile too much inventory (see: Gilt Group), and this detail has capitulated them into unicorn territory.
Unlike many startups who sacrifice profitability for growth, Stitch Fix grew their business contrary to that model. In the last 8 quarters, six in a row had positive net income, and they reported just under 1 billion dollars in revenue this year. To put that in perspective, Tesla isn’t even profitable yet. This is wildly impressive for a company who only raised a little over 40 million dollars.
As for their stock, Stitch Fix is pricing 10 million shares at $18 to $20 each. This is a stock that could be in very high demand.
If you’re reading this and thinking, ‘I wish I could grab a piece of this stock,’ you can! Sign up for a Stockpile account and begin investing today. You could finally turn your shopping addiction into a healthy investment.