On Thursday, the San Francisco-based company filed for an initial public offering, the first test of how investors will react to a private company’s stock. Stitch Fix hopes to raise $100 million, although the numbers will change with the market in the coming weeks.
Analysts have predicted that the company is valued at roughly $3 billion. Although Stitch Fix last year reported a loss of $594,000, overall its sales have been steadily gaining. This year, Stitch Fix brought in $977.1 million in sales, compared with $730.3 million in 2016.
Goldman Sachs and JPMorgan are the primary underwriters in the deal. If the initial listing is favorable, Stitch Fix will put its shares on the Nasdaq stock market — a move that could allow it greater flexibility for growth and even potential acquisitions.
Now 6 years old, Stitch Fix was founded by a former J.Crew buyer in 2011. The company works by sending customers a box of five clothing pieces selected by a stylist for $20 and subtracts the fee if they decide to keep any of the clothes. This type of service is quickly growing in popularity — only yesterday, Under Armour launched a similar subscription service that sends customers a complimentary box of preselected items that they can buy.
In general, the move to make an online shopping service public is likely to be closely monitored by other online shopping giants and subscription service competitors — Nordstrom’s Trunk Club also allows users to order a similar stylist’s box, while Amazon is working on a clothing subscription service of its own.