It’s time for this personal styling service to get a makeover of its own.

Shares of Stitch Fix sank 39.47% after the company reported smaller-than-expected sales and a larger-than-expected net loss in its earnings report yesterday afternoon.

The company, which ships clothes to online shoppers looking for a more affordable personal stylist experience, has shaken up executive leadership and laid off workers over the past year as it struggles to make its direct-to-consumer business model runway ready.

Unfortunately, it doesn’t seem like the wardrobe malfunctions will stop anytime soon. Executives slashed sales guidance and warned that there was “a lot of work still to do” to turn the company around.

• In its fiscal fourth quarter, sales fell 12.4% year over year to $319.6 million, and it reported a net loss of $36.5 million compared to a loss of $28.7 million in the same quarter last year
• Stitch Fix expects first-quarter sales of $303 million to $310 million, below analyst projections of $319 million.
• For its full fiscal year, the company said it foresees sales in the range of $1.1 billion to $1.16 billion, below analyst expectations for $1.31 billion.

Before the earnings news broke, shares of the company were up 7% year-to-date.

Stitch Fix has struggled with many of the same forces that drove some other retailers to report disappointing earnings earlier this quarter. Amid sticky inflation and a slowing economy, shoppers are ditching discretionary spending and focusing on essentials.

And let’s face it, you can’t get more non-essential than personalized online wardrobe styling.

Beyond macroeconomic issues, it’s unclear how popular the service really is. The company ended its operations in the UK last year, another sign that it has struggled to gain customers.

Can Stitch Fix mend its stock?

On the 13-year old company’s earnings call, executives laid out a plan for revitalization that includes making their platform more “fun and visual,” along with strengthening the relationship between customers and stylists.

Most analysts aren’t particularly optimistic about Stitch Fix’s prospects. Of the seven analysts currently covering the company, six rate it “hold,” while one gives it a “sell” rating.

And while lower interest rates will give the economy a boost, it might take awhile before the average consumer is ready to splurge on things like online personal styling.

So, when it comes to designing your portfolio, stick with the classic pieces. —LB

🟢 What’s up

• Flutter Entertainment, parent company of betting app FanDuel, popped 5.06% after it revealed its impressive growth plans.
• Hewlett Packard Enterprise rose 5.05% thanks to an upgrade from Barclays analysts who think that rising AI demand will increase the company’s server revenue.
• Trump Media & Technology Group gained 10.48% after shareholders panicked that the end of its lockup period would mean big selling by insiders, fears that haven’t materialized.
• Progress Software climbed 11.85% after a strong beat-and-raise earnings report.

What’s down

• Southwest Airlines stumbled 4.57% after announcing it will cut service to and from Atlanta, a major hub for air travel, as it looks to save money ahead of a showdown with activist investor Elliott Investment Management.
• Bank of America fell just 0.51% on the revelation that Warren Buffett can’t stop selling the stock.
• KB Home sank 5.35% after the homebuilder beat revenue estimates but missed on earnings. It also issued a downbeat forecast for the rest of its fiscal year.
• Global Payments dropped 6.37% thanks to a downgrade from BTIG analysts who were unimpressed by the payment provider’s near-term growth plans.

There’s an old saying in investing: Time in the market beats timing the market. Now, BlackRock can prove it.

Chief Investment & Portfolio Strategist, Americas at BlackRock Gargi Chaudhuri released her Fall 2024 Investment Outlook earlier today. The report is filled to the brim with investment advice, but the chart above immediately jumped out. While Americans worry over who to vote for and how each candidate will help or hurt their investments, this chart makes it unequivocally clear that, rather than invest in one party or the other, you should just invest.

“Investors who held the course as political winds changed earned nearly double those who shifted their strategy based on the election in the last decade — a trend only magnified over the very long term,” Gargi wrote.

“Rather than tailoring a basket of favored exposures dependent on the election outcome, we prefer looking to common ground — beneficiaries of infrastructure and nearshoring investments stand out as two key opportunities,” she continued.

The US auto industry is veering off course.

At least according to Morgan Stanley analyst Adam Jonas. The analyst wrote in a note today that he is downgrading the entire US auto industry.

Some companies were called out by name. The equity analyst specifically downgraded Ford from “overweight” to “equal weight,” and cut its price target from $16 to $12—about 10% higher than where shares trade now. Jonas also lowered General Motors from “equal weight” to “underweight,” and dropped his price target for shares down from its previous $47 to $42—a 12% upside from today’s share price.

And electric vehicles weren’t spared from the demotion either—Jonas downgraded EV maker Rivian from its previous “overweight” rating to “equal weight.” He lowered his forecast for the stock from $16 to $13, about 10% higher than where shares trade now.

Shares of all three car companies traded lower today.

Asleep at the wheel

In his note, Jonas cited increasing competition from China, as well as slowing domestic demand.

“At a high level, our downgrade is driven by a combination of international, domestic and strategic factors that we believe may not be fully appreciated by investors,” he explained.

American EV and traditional carmakers have lagged behind their Chinese competition over the last year, as China ramps up its auto production and offers competitive pricing. At the exact same time, US carmakers have struggled to make their products more affordable, and inventory has piled up as a result.

Electric vehicles have also hit another pothole: After a wave of first adopters hit the road, a lot of drivers just don’t want to deal with charging stations.

Shares of Ford are down 14.31% year-to-date, while GM has fared better, with shares up 26.85% in 2024. But Rivian has plummeted 47.73% in 2024 as the startup stalls.

Is it all downhill from here? Not all analysts are quite as pessimistic about the auto industry. Autos are one cyclical sector that economists say will benefit from interest rate cuts, since lower interest rates will make car loans more affordable.

However, the majority of analysts aggregated by the Wall Street Journal have a “hold” rating on Ford. And while more analysts have “buy” ratings on GM and Rivian than any other rating, almost as many give it a “hold.”

Maybe it’s time to pump the brakes on adding automakers to your portfolio anytime soon.—LB

• Former FTX exec Caroline Ellison was sentenced to two years in prison for her role in defrauding customers of the defunct crypto exchange.
• Called it: Money market funds are losing money as investors turn their attention to dividend-focused funds and cryptocurrency funds.
• Election gambling is in the spotlight as a panel of judges in the US Court of Appeals considers whether or not Americans should be allowed to bet on the presidential election.
• $240.8 billion: That’s the record-breaking amount of money consumers are expected to spend on holiday shopping this year.
• How to invest in bonds as rate cuts hit—a very helpful guide!
• Sen. Bernie Sanders grilled Novo Nordisk CEO Lars Fruergaard Jorgensen over the high price of weight-loss drugs in the US.
• To learn more about the ins and outs of the pharmaceutical industry, listen to the latest episode of our very own After Earnings podcast where hosts Ann Berry and Katie Perry (the other one) chat with Pfizer CFO David Denton.

We’ve got weekly initial jobless claims dropping first thing tomorrow morning. This has quickly become a key report to watch for anyone trying to figure out the Fed’s next move. The central bank’s dual mandate is to keep inflation down and promote employment, and with inflation seemingly tamed, all eyes have turned to this weekly check-in on the labor market’s health.

There’s also the second revision of GDP on deck tomorrow. The first GDP revision a few weeks ago revealed that the US economy grew 3% in the second quarter of 2024, and this second revision shouldn’t unveil anything new. But it will shed some light on the state of the US economy as the Fed prepares its next rate cut.

Speaking of the Federal Reserve, eight Fed governors and presidents, including Jerome Powell himself, will be speaking at various events tomorrow. The deluge of FedSpeak comes after the central bank cut interest rates last week, and should help shed some light on where monetary policy is heading next.

After the close

• Costco (COST) is well-positioned to capitalize on US consumers strapped for cash and looking for a bargain. The only problem is, everyone else knows that too—which is probably why shares are up nearly 40% in 2024. The company’s business model is undeniably appealing, and it has reported strong top and bottom line growth this year, but with little room for error, any stumble in tomorrow’s report could bring an outsized selloff. Consensus: $5.08 EPS, $79.93 billion in revenue.
• Yes, BlackBerry Limited (BB) is still a company. And no, things are not going well. Although it enjoyed the occasional surge as a meme stock, shares of the phone maker are still down over 30% in 2024 thanks to declining revenue and earnings losses. One thing to watch: BlackBerry hired a new CEO back in July, who will take center stage in tomorrow’s report as he attempts to convince shareholders he can right this sinking ship. Consensus: -$0.04 EPS, $192.21 million in revenue.