Farfetch: Luxury Fashion Is Likely In Trouble

Summary

  • Farfetch is a leading luxury marketplace, sourcing products from around the world.
  • Shares have moved widely, gaining and losing high double digits.
  • Macroeconomic developments suggest luxuries will struggle in the coming months.
  • Farfetch's financials are underwhelming, and we struggle to see their route to profitability.

Facade of Balenciaga store sign at night

Robert Way/iStock Editorial via Getty Images

Investment Thesis:

Farfetch's investors have been on a wild ride in the last few years, with shares up 558% and down 89% within 2 years. The share price has bottomed somewhat after a recent fall (and

Farfetch stock price
Data by YCharts

Farfetch Q1 performance

Farfetch's Q1 performance breakdown (Farfetch)

Farfetch G&A expenses

G&A as a % of revenue (Farfetch)

Farfetch - Demand generation

Demand generation expense as a % of revenue (Farfetch)

Farfetch operating margin

Farfetch's operating margin 2015-2021 (Tikr Terminal)

FTCH stock rating

Seeking Alpha Quant Rating (Seeking Alpha)

This article was written by

The focus of our research is to provide insightful and new ideas, through deep bottom-up business analysis. We look to tell a story and identify the hallmarks of sustainable quality. Our view is objective and not sway by the emotion of market sentiment and short-term desires.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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