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Farfetch Shares Slump on Weaker-Than-Expected Q3 Revenue

Revenue at the U.K. online luxury-goods seller Farfetch trailed the FactSet analyst consensus. The stock is lower.
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Farfetch  (FTCH) - Get Farfetch Limited Class A Report shares slumped Friday, after the U.K. online luxury-goods seller reported weaker-than-expected sales for the third quarter.

Revenue surged 33% in the quarter to $583 million from a year earlier but trailed the FactSet analyst consensus of $591 million.

To be sure, net income registered $769 million, or $2.09 a basic share, in the quarter, swinging from a loss of $537 million, or $1.58 a share, in the year-earlier quarter.

Farfetch registered an adjusted loss of 14 cents a share, beating the analyst consensus of a 24-cent loss.

The stock slid 13% to $39.67 in recent trading. It had touched a 52-week low $34.29 on Oct. 12. And it had moved up 15% in the 31 days through Thursday.

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Farfetch has a "track record of delivering aggressive market share capture," Chief Executive José Neves said in a statement. 

The company "accelerated two-year-stack digital platform gross merchandise value growth to 97% in the third quarter.” 

Farfetch “remains on track to achieve our goal of full-year adjusted [earnings before interest, taxes, depreciation and amortization] profitability and gross-merchandise-value growth above our long-term 30% compound-annualized-growth target.”

For full-year 2021, Farfetch estimates digital platform GMV growth of about 33% and adjusted Ebitda of about $5 million.

Morningstar analyst Jelena Sokolova puts fair value for the stock at $24. “We don’t expect to significantly alter our fair value estimate for Farfetch, as the company reported third-quarter results below its guidance,” she wrote Friday.

“While we believe Farfetch’s business model exhibits traces of a network advantage moat source, we are currently wary of assigning it a moat, given the early stages of industry development, the company’s small size and reach … and lack of business model monetization.”