Stitch Fix, Inc. (SFIX) Accused of Misleading Investors About Its Active Client Growth Rate

According to the filed class action complaint against the company's officers and directors for alleged violations of the Securities Exchange Act of 1934 between June 8, 2018 and October 1, 2018, Stitch Fix, Inc. repeatedly emphasized that its active client base had experienced dramatic growth during 2017 and 2018 and that its strong third quarter 2018 financial results indicated continued positive momentum for the company. To the contrary, the company's active client count was virtually flat. On October 1, 2018, Stitch Fix announced that its fourth quarter 2018 financial results had fallen short of projected active client growth expectations and that its active client growth had plummeted by 70% quarter-over-quarter. On this news, Stitch Fix's stock fell more than 35% to close at $28.94 per share on October 2, 2018.

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