Online personal shopping company Stitch Fix priced its initial public offering (IPO) below expectations in a downsized offering on Thursday, raising $120 million.
The underwhelming IPO highlights the challenges e-commerce companies face going public in the wake of poor performances from Snap and Blue Apron. It was also a disappointing debut for the newest breed of online shopping companies, which includes Warby Parker and Rent the Runway.
Stitch Fix priced eight million shares at $15, below its indicated range of $18 and $20. The company had originally planned to sell 10 million shares in the offering.
Experts this early in the game say the main concern for investors was its continued ability to stay profitable, according to a source familiar with the situation. That concern was exacerbated in the wake of troubles at Blue Apron (NYSE: APRN) and Snap (NYSE: SNAP). Both went public with losses on the promise of growth, only to see their stocks crater amid disappointing performance.
Founded in 2011 by Harvard Business School graduate Katrina Lake, Stitch Fix touts a combination of data and stylists to select clothes for subscribers. Customers fill out a survey of their preferences based on size, budget and style. The company sends five personalized apparel and accessories items, which customers can either return or buy at a discount.
Stitch Fix works with more than 600 women's fashion brands, including Joie and Citizens for Humanity, and more than 30 men's brands, including Scotch & Soda
The San Francisco-based Stitch Fix is expected to start trading on the NASDAQ stock exchange under the ticker SFIX.
