Stocks: Stitch Fix crashes, PagerDuty rises, Dave & Buster’s jumps, Roku pops on Youtube deal

Yahoo Finance anchors discuss earnings for Stitch Fix, PagerDuty, and Dave & Buster's, along with Roku shares popping after the streaming service reached a long-term deal with Google for Youtube.

Video transcript

JULIE HYMAN: Let's talk about some other movers that we are watching here in early trading, one of them is Stitch Fix. Now, this, of course, is the e-commerce/personal stylist company, and the company coming out with a forecast that was well below what analysts had been anticipating, even after the last quarter looked relatively positive as you can see there. But the company says it will see as much as $520 million in its fiscal second quarter in revenue, the estimate was for about $585 million. Brian Sozzi, you and I have been covering this company, tracking this company for a while, and it's definitely hit some speed bumps as of late.

BRIAN SOZZI: Julie, do we have to cover this one? This was a tough-- this was a really tough quarter and just from a stock price perspective, you're seeing the shares here-- keep in mind, this stock was at $106 on January, 27th. It is now bumping up against the IPO pricing back in 2017 of $15 a share. So it's been a very challenging year for Stitch Fix. Of course, as it has a new CEO, I believe that started August 1st, so Elizabeth Spaulding, the new CEO over at Stitch Fix. The stock price under pressure.

And this quarter was not a good look at all. And I really want to call attention to they only added 15,000 new active clients quarter over quarter. Now, when you are an internet-driven business, internet-driven retailer, and you're only adding 15,000 new clients in this vast world of the internet, that number is not going to cut it, especially as many of us have started to go back to work and outside and we need more clothes. But just you know, we have a good soundbite here from Stitch Fix's CFO Dan Jedda, just explaining I think why you're seeing the sell-off on the stock and how deep the challenges are at the company.

DAN JEDDA: We are in the first inning of a long game and will likely take several quarters to start seeing the impact we expect from our efforts. As we continue to learn, we are confident we are pivoting quickly to respond to any challenges we encounter. We remain excited for the journey we have embarked upon and confident that we are positioned well to become the global destination for personalized shopping.

BRIAN SOZZI: So Julie, I don't see the catalyst here. I think it's going to be a challenging fourth quarter for this company. That is reflected in their guidance, which was about $60 million short versus Street estimates for revenue, the Street is not out here liking this quarter by any stretch of the imagination, estimates are coming down. Not a good day.

BRIAN CHEUNG: Yeah. I mean, if I could just jump in here. I think what's interesting is that the story for Stitch Fix we were talking about relative to the IPO price kind of coming around full circle here. I think that's actually a story not just for Stitch Fix but for a lot of the IPOs that had debuted even before the pandemic to very lofty valuations. I mean, consider Beyond Meat, for example, it has also done a big round trip, going from $65 or $66 when it first opened up, its kind of trading back at that level again despite the massive pop that we had seen in the later part of 2019. I think this just shows that valuations pre-pandemic were maybe a bit lofty here, especially with a lot of these high profile kind of tech-facing, consumer-facing companies.

When you talk about the underlying business model for Stitch Fix, very interesting to see kind of the management blame it on the possible cannibalization of their free style offering to the offerings that they had already had, trying to unveil new product lines that may be taking steam out of their existing ones. But I just want to point out, very interesting to see how they might interact with the possible M&A in the future. I don't know anything, I'm not trying to start any rumors but when I look at Stitch Fix's model, I do wonder if there's a possible integration with Pinterest, who they do already allow the social media plug-in with their offerings right now but it seems like it could be a match made in heaven, the ability to have predictive analytics and teams on-site to help figure out based off of things that you've purchased in the past, whether or not there are other offerings that they can sell you in the future. That might be a match made in heaven but I don't know, that's just me.

BRIAN SOZZI: Hey, Brian, I think Stitch Fix turned around. It's now up 30%, right? Oh, no, nope.

BRIAN CHEUNG: And it's gone.

JULIE HYMAN: Well, maybe some investment bankers are listening and they can drum up some business by trying to pitch that deal, we'll see, Brian Cheung. One other earnings number that we're watching that's going in the opposite direction is PagerDuty. That company is rising after it came out with its numbers. It's 2022 full-year forecast, you see there their loss was narrower than estimated, revenue beating estimates. And the company's forecast is better than estimated as well, seeing a loss per share for the fourth quarter of $0.05 to $0.06. The loss that analysts were estimating was closer to $0.08. So that reflected in the shares here today, where we have been seeing an increase. And analysts pretty positive also, saying that the enterprise clients here remain strong. Actually, we were seeing more strength before, now it is only up by about 1.4%. So melting away to some extent.

And then also we're watching Dave and Buster's, that company coming out with numbers. Brian Sozzi real excited about this one, he's been practicing his Skee-Ball in advance of this hit, that's my favorite personally. I don't know about you, Brian.

BRIAN SOZZI: Well, yes but Julie, the experience inside Dave and Busters is starting to change in a big way, and yeah, well, the stock price is up 4% here we're seeing same-store sales I think a little bit better than the Street would have expected compared to 2019. Their event business down 64%, still under pressure. They did note the first five weeks of the fourth quarter off to a solid start. Mostly because of more people just walking in off the street, just getting reacquainted with the Dave and Buster's experience.

And to that point, I mean, you have a new CEO in Kevin Sheehan at the helm, used to lead Norwegian Cruise Lines, and they even started to add new experiences. It's not the Dave and Busters I went to for 10 beers back in college. They're adding trivia nights in there, they're fine-tuning the menu. I tweeted the menu out now, they're testing butternut squash ravioli, apple tarts, flatbreads, Cajun barbecue shrimp, and even have a new drink called the-- what is this, the monkey shoulder punch, which is a fascinating drink. But it's just-- it's a different company. It's not the Dave and Buster's you and I know that from a couple of years ago.

BRIAN CHEUNG: Look, of all the games that you could play at Dave and Buster's, I feel like one of the riskiest ones would be eating the shrimp there but I think aside from all those points, Dave and Buster's--

BRIAN SOZZI: Oh, ow. Brutal. Wow.

BRIAN CHEUNG: --obviously having this interesting guidance there. What is interesting is that on their earnings call the CFO was saying that they should watch out for their holiday earnings because apparently Christmas and New Year's both fall on a Friday and a Saturday. that was compared to a Tuesday, Wednesday in 2019. Those comps are going to be a bit difficult. I guess people don't want to spend their actual holiday on the weekend at Dave and Buster's. I might beg to differ but we'll see if we can get a Yahoo Finance morning team outing to the Willowbrook Mall Dave and Buster's how do you guys feel about that?

JULIE HYMAN: Sure. I think so--

BRIAN SOZZI: They're coming out with a new Top Gun VR experience, a new VR experience middle of next year related to the new Top Gun movie. Sign me up, Maverick. I'm down. Let's do it.

JULIE HYMAN: I mean, the only problem is, is that traditionally with the Dave and Busters or bowling, what have you, traditionally finger food is what you think of. But it's really not what you want to be eating when you're at a place where you're touching a lot of stuff that everybody else is touching.

BRIAN CHEUNG: No shrimp for me.

JULIE HYMAN: Anyway. All right, moving on, we have to mention some late-breaking news here on Roku and YouTube, they finally come to an agreement. Now, this has been something that has been going on for a while, Roku and Google have been negotiating over the appearance of YouTube and YouTube TV apps on Roku. Now there is a multi-year extension, it had been set to expire this month, the deal between the two. YouTube would have been gone from Roku's channel store. So this is obviously being read as good news for Roku from the market. By the way, I mean, Roku has already been seeing some battering for the stock. So this is also a bit of a relief here it looks like for those Roku investors. We're going to keep tracking that.