Why Stitch Fix Stock Fell as Much as 13% This Week
Shares of Stitch Fix (NASDAQ: SFIX) fell as much as 13% this week, according to data from S&P Global Market Intelligence. The online styling service and apparel retailer had no company-specific news, so it looks like the stock moved because of high short interest and broad market declines this week. As of the market close on Thursday, the stock is down 10.2% since last Friday's close.
Stitch Fix didn't announce any business updates this week, so it looks like we can chalk up these price declines to stock market developments. Stitch Fix has a high short interest, estimated at 24%, meaning that a lot of its shares are sold short by short sellers. When short sellers are forced or choose to buy back shares and cover their positions, heavily shorted stocks can move higher quickly. This is called a short squeeze and may have happened to Stitch Fix in the last month.
Shares were up around 40% at one point in the last few weeks, and the decline this week may have just been due to some short-term traders selling their positions. Whatever happened, high short interest typically leads to high levels of volatility, and Stitch Fix shareholders should expect these wild price movements to continue in the future.
Source Fool.com
