Stitch Fix sinks back near offer price in disappointing IPO

Bloomberg

Stitch Fix Inc. initially soared before sinking back near its offer price in a downsized $120 million initial public offering that fell about a third short of its target.
The online personal-styling service backed by Benchmark jumped almost 24 percent in its trading debut. After then dropping as much as 1.3 percent below the $15 offer price, the shares closed up 1 percent in New York.
Before its IPO for 8 million shares, Stitch Fix had marketed up to 10 million of them for $18 to $20.
While Stitch Fix is unusual among newly public companies in that it has posted a profit and has a clean balance sheet, CEO Katrina Lake said investors may not have been willing to pay the initially marketed valuation because the business differs from traditional retailers and e-commerce companies.
“It’s not an obvious or easy story to tell,” Lake said.
“People were trying to understand how the data science fits into the business. While we are disappointed, we are totally motivated. We’re happy to prove ourselves.”
Stitch Fix collects information on customers’ style, price and size preferences and, with the help of stylists, sends five pieces of clothing for a $20 fee.