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Data: FactSet; Chart: Naema Ahmed/Axios

Stitch Fix went public just over a year ago at an impressive $1.4 billion valuation. It's held on to that valuation to this day: The company is now worth about $1.5 billion. The problem, as far as the market is concerned, is how it got here from there.

The big picture: Stitch Fix had a relatively small IPO and found it quite hard to sell its vision of a data-first, ultra-personalized clothing store.

  • The company then surged to a $4.8 billion valuation in September as investors started treating it a bit like a SaaS company, looking for recurring earnings from regular shoppers receiving subscription boxes.
  • When Stitch Fix's "active client count" fell short of expectations, the stock promptly plunged. The market decided that Stitch Fix was a bit like Blue Apron, a company that tried and failed to get millions of consumers to get deliveries on a regular schedule.

But, but: There are two big differences between Stitch Fix and Blue Apron. First, Stitch Fix is profitable. And second, CEO Katrina Lake was always hesitant to sell Stitch Fix as a recurring-revenue subscription play. Bloomberg's Sarah Halzack writes:

"The service isn’t about sucking you into a subscription, it's about being one of the main places you go to buy clothes, at whatever intervals you need them. And if Lake is right that its algorithms and stylists can learn to understand just what you want, it could steal more market share from established retail chains."

Be smart: Stitch Fix the company hasn't been nearly as volatile as the stock price might have you believe. There was a mini-bubble in Stitch Fix shares, which burst, but the underlying company is still delivering on its value proposition. If you've shopped there before and you trust it to know what fits you and what you like, then the next time you want to buy clothes, there's a good chance you'll shop there again.

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