Mon, Jan 26, 2026|Whitney Tilson

My initial A+ experience with Stitch Fix; I'm even more bullish on Alphabet; My dad is home!

1) As promised, I'm following up on my experience with Stitch Fix (SFIX)...

On January 14, I wrote about the clothing retailer. It was one of the most intriguing companies I saw at the ICR Conference in Orlando.

As I said, Stitch Fix has a unique business model – it doesn't involve shopping at a brick-and-mortar location or online store:

Instead, you fill out details about your size, budget, and clothing preferences on its website. Stitch Fix then uses AI and a human stylist to pick a handful of items and mail them to you as often as you wish: every two to three weeks, monthly, every other month, quarterly, or on demand. Then you select which items you like, only pay for what you keep, and mail the rest back.

After analyzing the company's financials, I concluded:

I think time is working in investors' favor here. This business has established a nice – albeit small – niche, has plenty of cash, and is FCF positive, so it isn't going away. This removes most of the downside.

In the meantime, plenty of good things can happen: The adoption of AI can lead to lower customer-acquisition costs and the ability to provide more targeted clothes that customers keep, revenue can continue to tick up, and the company's net income can turn positive. Plus, I could see this being a tasty, tiny acquisition target for any number of buyers.

However, before recommending the stock, I said:

I first want to try out the service. I just signed up yesterday and am looking forward to receiving my first box of new clothes to check out. I'll let you know what I think!

Last week, I received my first shipment. It contained stylish leather boots, black jeans, a button-down shirt, a light sweater, and a crew shirt.

Here are pictures of me wearing all five items and a close-up of the boots and button-down shirt:

Overall, I loved every item – as did my much more style-savvy wife and daughters. They looked good, fit perfectly, and were super comfortable.

As for pricing, it found it quite reasonable...

Each item was between $59 and $98. Customers also get a 20% discount if they keep all five items (essentially meaning it makes no sense to return only one item – very smart). And I got a $30 discount as a first-time customer.

That brought my total to $276.40, which I view as a bargain. Here's a picture of my receipt with all of the details:

You can also see that there's a note at the top from a personal stylist, Stephanie, who Stitch Fix assigned to me – a real person, not an AI bot!

I have yet to communicate with her because I've been traveling, but also because I wanted to see how Stitch Fix would do without human intervention, based solely on the information they collected from me during the initial registration process.

This is an important element of the investment thesis for the stock...

If Stitch Fix has to hire lots of people like Stephanie to hold its customers' hands, that's very expensive and will reduce profits.

But if the company's computers, with an increasing assist from artificial intelligence, can correctly identify clothing that its customers will love (and not return), then the prospects for the business – and the stock – are much better.

Overall, my experience was an A+. And I'm looking forward to receiving my next shipment in three months (the least-frequent option that Stitch Fix offers).

For more analysis of the company and stock, I recommend this three-part series someone posted on LinkedIn:

I'll also share feedback some of my readers sent...

As Chris T. wrote:

Regarding your writeup on Stitch Fix, shortly after the company started in 2011 my wife tried the service. She found after a couple of attempts that the clothes were not her style and were not to the quality she likes. Admittedly that was early and she has not tried it since.

At the time I was fairly dubious of the concept since "shopping" is traditionally a woman's "sport" and getting a few things by delivery to try and then spend time and effort returning did not seem to equate with a leisurely afternoon checking out the clothes at a Nordstrom or Bloomingdales.

It will be interesting to see how your experience goes. Keep us posted as to the results of your test.

Here's what Luis C. said:

I'm glad you are giving the service [a trial]. I have been a customer for several years. Here are my first hand impressions:

I started buying from them because my closet looked like a big storage of black clothing. After my divorce, I needed to add some color and fun to my wardrobe.

At the beginning, it was a lot of fun to get the boxes. Every three months I would be surprised with clothes that I would not venture on buying myself. But after a couple of years, I found the choices a bit repetitious. Similar designs, with little variety. I'm (dressed) boring again!

It's expensive. If you take the whole "fix", it can be $250-$300.

The service is easy to use and arrives like clockwork. I never tried to return anything, but a return bag is included, so it should be easy enough.

Currently, I'm only taking delivery once or twice a year. I went through my closet, and found inventory delivered more than a year ago, that I haven't even tried. Since I still work, I have taken a kind of "Steve Jobs" approach to my daily clothes: I wear boring surgical scrubs daily and regular clothes for weekends or night.

Let me know how you fare with the service.

And Sireesha B. chimed in:

I signed up with them in 2022 for my elementary school age kids and kept all the clothes as it was more economical to just keep all the clothes because of the discount. I felt we did not need clothes every month so I only ordered twice a year and stopped the service as my kids approached middle school, as I felt that their shoes were poorly made and hated that I could not ever pick out better shoes (they had no options of other brands).

I tried their service as well. I liked the fit of some clothes, but found their prices steep for the brands of clothes I did not recognize or did not like.

So while I would consider using Stitch Fix for the convenience of it, I would only do so once a year max.

Lastly, Scott M. said that he and his wife have had a better experience:

My wife and I have been using Stitch Fix for the last six months or so. We have found it to be very useful/helpful. It saves time and effort and the quality and personal approach is great. We plan to continue and [are] recommending it to friends. It's a great service!

I'm actually not discouraged by this feedback.

Even with many problems, the company, as I showed in my initial e-mail, is free-cash-flow positive and has started to grow again. And there's clearly lots of low-hanging fruit that better management and AI can help improve.

Of course, my team and I always give our best investment ideas to paid subscribers to Stansberry's Investment Advisory. But with a market capitalization of only around $700 million as of earlier this morning, Stitch Fix is too small and speculative for our flagship newsletter.

The Investment Advisory is more focused on safer stocks that I would feel comfortable putting in my parents' retirement account – ones like two of my longtime favorites: Berkshire Hathaway (BRK-B) and Alphabet (GOOGL).

However, I think there's room in a well-diversified portfolio for an occasional riskier stock like Stitch Fix.

Put simply, this looks like the second-most interesting speculation I'm aware of right now – behind only Joby Aviation (JOBY), which has long been my favorite (archive here).

Of course, with any kind of speculation like this, be sure to understand the risk. And if you do put money to work, size the position appropriately.

2) I expected a big response to Friday's e-mail, How Google Gemini figured out what was wrong with my dad – and may have saved his life.

But the outpouring of support and prayers for my dad was truly overwhelming, so thank you from the bottom of my heart.

I have a wonderful update to share...

The diagnosis I came up with using Google Gemini turned out to be exactly right. My dad was bitten by a tick when we were on walking safari in South Africa at the beginning of this month and contracted African tick bite fever, which was mainly characterized by extreme weakness (see Friday's e-mail for a detailed description).

Fortunately, there's a quick and easy cure: the antibiotic doxycycline, which my dad began taking on Friday.

On Saturday, we were concerned because he wasn't feeling any better. However, that's not unusual – because the powerful drug can actually cause patients to initially feel worse.

But yesterday, we were all thrilled that he felt much better, and we planned to take him home tomorrow.

However, he felt so good today that they discharged him this morning and he went home! Here's a picture he just sent me:

Looking ahead to upcoming e-mails, I'll share some of the fascinating insights and stories regarding chatbots like Gemini that many of my readers shared.

And, yes, the way Google's Gemini outperformed OpenAI's ChatGPT makes me even more bullish on Alphabet's stock.

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.