Nov. 21 at 1:57 PM
$SFIX been lowkey shorting this for a bit, but adding more size into it over
$4
Given their business model I can't imagine they do well in the next year and while it has sold off a lot, it was in the 2s earlier in the year so more downside is reasonable.
Also remember
-they market primarily to the 25-35 (bias towards women) demographic, a very cash strapped age demographic in the US. Not hard at all to see them continuing to tighten purse strings. Active clients have shrunk every year since 2021
- young people are dating less than ever, one of the main reasons people want to dress well
- their real product isnt the clothes themselves so much as the convenience of having clothes picked and sent. This is extra bearish more than a traditional clothing retailer for a few reasons
A) operational cost will likely go higher due to the ever increasing cost of logistics
B) people may have mentally checked out of the idea of purchasing but not cancel until a few unkept orders. Basically a “do I really want to keep this service? Let’s see what the next two boxes bring and if not I’ll cancel”. Also, the fact it’s delivered and chosen by someone else allows for less “sunk cost” fallacy for a consumer as they didn’t drive and get it themselves
C) in times of economic hardship, when people do splurge, they want a form of escapism. Let’s be real, a ton of retail purchasing is due out of boredom. I can very easily see there being a minor renaissance of foot traffic in stores as people “browse” but eventually buy very little. You don’t get that same form of boredom alleviating escapism by having clothes delivered.
It won't be sexy, but theres no real way this ever rockets given their business model so decent place to park money and collect a few %. I personally think a 10-20% drop sometime within the next year is a given. If that doesn’t sound sexy, ask yourself if you can see spy being green this year by that.
