Investors hoping to get in early on a popular startup company are asking what the Stitch Fix stock price is, but they'll have to wait a little longer before the company goes public.
According to Recode, the Stitch Fix IPO could be set before the end of 2017. That means there won't be a Stitch Fix stock price until the company goes public.
However, the company has to go public soon if it wants to make the 2017 deadline.
While we wait to see if Stitch Fix goes public, we wanted to make sure Money Morning readers know the most important details about this innovative company, including whether it's worth buying...
What Is Stitch Fix?
Stitch Fix is an online clothing subscription service for women and men.
A customer starts by filling out a questionnaire about their budget, size, and style preferences. Then, for a $20 fee, a stylist will ship five pieces of clothing to the subscriber.
The subscriber keeps what they like and are charged the cost of the clothes. Their $20 fee goes toward any purchases.
Any piece they don't like can be shipped back to Stitch Fix via a prepaid envelope. Stitch Fix's model allows for the convenience of shopping online, while adding personalized recommendations from a stylist. This unique model helped Stitch Fix haul in $730 million in revenue for 2016.
However, other business have taken note of Stitch Fix's success...
Stitch Fix's Biggest Competitors
One of Stitch Fix's competitors is Trunk Club. Trunk Club is an online clothing subscription service that Nordstrom bought three years ago for an estimated $350 million.
Trunk Club targets customers looking for more expensive clothes, but it still competes with Stitch Fix. Trunk Club clothing sells for roughly $100 to $300 per item, while the average price point per item for Stitch Fix is $55.
But there's an even bigger and more worrisome competitor just entering the market...
The bigger threat to Stich Fix's sales is Amazon.com Inc. (Nasdaq: AMZN). That's right, the mightiest of U.S. online retailers is also interested in the online clothing subscription industry.
In March, AMZN rolled out a new feature to its Prime customers called "Outfit Compare." It allows the customers to upload several pictures of themselves in different outfits. A stylist will respond with a vote on which one looks better.
At some point, the company could use Outfit Compare as the start of a service that competes directly with Stitch Fix.
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While Stitch Fix does have a unique business model that has allowed the company to close in on sales of nearly $1 billion in six years, can Stitch Fix still make money with Amazon looming?
Here's what we're recommending Money Morning readers do on the Stitch Fix IPO date, plus how they can start profiting from the online retail industry without waiting for another IPO...
Should I Buy Stitch Fix Stock?
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Money Morning does not recommend investing in IPOs.
"I generally tell retail investors to avoid buying an IPO at the open because the insiders have already made all the money available at the debut," Money Morning Director of Technology & Venture Capital Research Michael A. Robinson told us.
You see, "insiders" like hedge funds and big banks are able to buy a stock at an IPO offering price before the retail public. Snap Inc. (NYSE: SNAP) set its IPO offering price at $17 per share, but retail investors had to wait until March 2 to buy Snapchat stock, at which point it opened at $24 per share.
Also, stock prices after an IPO can have volatile price swings. Since Snap's March 2 IPO, the stock price has plummeted 42.04% to $13.91 a share.
While we recommend avoiding the Stitch Fix IPO, we still see a profit opportunity in online retail that's much safer than owning Stitch Fix stock: Amplify Online Retail ETF (Nasdaq: IBUY).
IBUY holds a diversified group of publicly traded companies that generate 70% or more of their revenue from online or virtual sales.
Some of its most well-known holdings include Amazon.com Inc. (Nasdaq: AMZN), eBay Inc. (Nasdaq: EBAY), and Alibaba Group Holding Ltd. (NYSE: BABA). Instead of owning shares of a company that just sells clothes, you can own three e-commerce giants, each with market caps over $40 billion. You can also own IBUY for a fraction of what a regular share of AMZN or BABA would cost you.
So far in 2017, the IBUY stock price has climbed 32.85%. In comparison, the Dow Jones Industrial Average has climbed just 12.75% during the same time.
And because the stock prices for AMZN, BABA, and EBAY are expected to go higher in the next 12 months, there could be even more gains are on the way for IBUY shareholders.
According to FactSet, Wells Fargo projects the AMZN stock price will climb 49.15% to $1,400 in the next 12 months. Wells Fargo also projects the BABA stock price will climb 34.71% to $225 per share in the next 12 months.
For the EBAY stock price, Wells Fargo projects it will climb 18.89% in the next 12 months to $45 per share.
The Bottom Line: As brick-and-mortar retailers struggle, Stitch Fix is nearing $1 billion in revenue. However, CEO Katrina Lake has huge competition from Amazon.com, and IPO prices can have volatile price swings in the first few months of trading. Instead of owning a risky IPO, a safer way to potentially profit from the online retail industry is by owning shares of IBUY.
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