Why Stitch Fix Stock Soared Today
Shares of clothing e-commerce company Stitch Fix (NASDAQ: SFIX) soared on Tuesday after rival company Poshmark was acquired for $1.2 billion. As of 12:15 p.m. ET, Stitch Fix stock was up 15%.
Poshmark has generated less than $350 million in trailing-12-month revenue, whereas Stitch Fix has generated over $2 billion. However, Poshmark is getting bought out for $1.2 billion while the market capitalization of Stitch Fix is only around $500 million -- that's after today's 15% gain.
Supposing it could fetch a similar price-to-sales (P/S) valuation to Poshmark in a buyout, Stitch Fix would be worth somewhere between $6.5 billion and $7 billion -- 13 times to 14 times where it trades now. Therefore, it appears that investors are interpreting Poshmark's buyout as a signal that Stitch Fix stock is undervalued, which is why it's up today.
Source Fool.com
