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Will the American Consumer Stay Thankful Into the Holidays? Takeaways From Retail Sales
Will the American Consumer Stay Thankful Into the Holidays? Takeaways From Retail Sales

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 Free 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.

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.”