Friday's Headlines: Stitch Fix Announces Significant Layoffs
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Yext (YEXT) +4.6%
Nautilus (NLS) +3.8%
Costco (COST) +0.9%
Nordstrom (JWN) +0.8%
The Home Depot (HD) +0.8%
Moving Down ⬇️
StoneCo (STNE) -14.9%
Zendesk (ZEN) -14.3%
Trupanion (TRUP) -11.5%
Baozun (BZUN) -11.0%
Lovesac (LOVE) -10.9%
Here are the stories that you need to know ahead of market-open today, Friday the 10th of June:
Stitch Fix Lays Off 330 Employees 🪡
Shares of Stitch Fix are down some 15% in pre-market trading this morning after the company reported a disappointing quarter last night, while also revealing that it will lay off around 15% of its salaried workforce.
It was a tough start to the year for the online styling service, with Stitch Fix’s net loss more than quadrupling from the same time last year to hit $78 million. Revenue also fell year-on-year to come in at $493 million, while perhaps most worryingly for the company, active clients also fell by 5%, capping off negative growth across the board.
In the earnings call, CEO Elizabeth Spaulding cited multiple reasons for the troubles, including a new onboarding flow that created friction and the ongoing effects of Apple’s privacy changes in acquiring new customers. And although Spaulding assured investors that Stitch Fix was already seeing improvements in this, a disappointing forecast was given for the next quarter, with revenue estimates of between $485 - $495 million indicating an expected drop of about 15% from prior-year levels.
Of course, the big headline was that Stitch Fix will also lay off 15% of its salaried workforce — about 4% of its total staff — in an effort to save as much as $60 million this year. In a memo to employees, Spaulding wrote: “We’ve taken a renewed look at our business and what is required to build our future. While this was an incredibly difficult decision, it was one we needed to make to position ourselves for profitable growth.”
DocuSign Disappoints Again ✍️
Things are going from bad to worse at DocuSign after last night’s earnings report. While the digital signature specialist delivered solid revenue in its first quarter of the fiscal year 2023, disappointing guidance and an earnings miss sent the stock plummeting last night in extended trading.
Revenue came in at $589 million for the quarter, an increase of 25% year-over-year. However, widening losses of $0.14 a share, compared to $0.04 in the same period last year, took the shine off.
And as always, investors are much more interested in where you’re going, not where you’ve been. Disappointing revenue guidance of $600 - $604 million for Q2, which would represent about 15% growth at the midpoint, was enough to send the stock down as much as 24% at the time of writing.
DocuSign is down over 70% from its 52-week highs as the pull-forward from the pandemic has dissipated and its growth rate has slowed significantly. Things were not helped by a wider tech sell-off in which high valuations have fallen well out of favour. At today’s open, the stock will likely fall below pre-pandemic levels, sharing a similar trajectory to other pandemic-favourites like Shopify and Zoom.
Nio Takes A Hit Following Earnings 🚗
Shares of electric vehicle (EV) manufacturer Nio took a 7% hit yesterday following a disappointing earnings call for the Chinese company.
Despite revenue rising 24% compared to the year-ago quarter, widening losses of over $281 million hurt the firm as it struggled to deal with rolling lockdowns across China. Demand is certainly there, with the company achieving an “all-time high order flow” in May, but disruptions to both its production line and its supply chain have hampered Nio’s ability to deliver.
Nio was founded in 2014 and manufactures premium EVs for the international market. While its products have generally been met with critical acclaim, the company has also developed a reputation for being an unpredictable stock. It delivered 91,429 EVs in 2021, and is slowly solidifying itself as a genuine competitor to some of the industry’s bigger names.
While Nio remains unprofitable, posting a loss per share of $0.13 in yesterday’s earnings call, it has a number of distinct traits that could see it develop into a true EV powerhouse. China is currently the largest market for EVs in the world, so having its base in Shanghai is an enormous advantage. Nio is also consistently developing new models that are receiving rave reviews, with both a sedan and an SUV expected to launch this coming year.
However, it must be noted that the EV industry is highly competitive, with many legacy automakers pivoting to join the market. This, along with the presence of electric-only companies like Tesla, will make continued progress all the more difficult.