Farfetch Stock Is Down 40% as Results Trigger Downgrade

Farfetch stock was down 40% to $2.87 on Friday.

Farfetch posted second-quarter revenue of $572.1 million, falling from a year ago and landing far below Wall Street’s call for $648.7 million. It also posted an adjusted loss of 21 cents a share, flat from the year-ago quarter but narrower than the 28-cent loss analysts were expecting.

“Our Q2 results show Farfetch is growing, becoming more efficient, and executing on our key strategic priorities,” said CEO José Neves in the earnings release. “We have also taken decisive action to adapt to the macro environment of the last 18 months.”

The company slashed its full-year guidance for group gross merchandise value, or the total dollar value of orders processed, to $4.4 billion from $4.9 billion.

“Though we view cost rationalization initiatives positively, we think reduced guidance implies a fairly tough 2H hurdle given softer trends,” the KeyBanc analysts wrote.

Wedbush analysts called second-quarter results “very disappointing. ” They maintained their Neutral rating but slashed their price target to $3.50 from $5 and lowered their adjusted Ebitda forecasts for this year and the following in a report.

“FTCH remains an extremely challenging business to wrap one’s head around, with highly-volatile fundamentals and one of the most confusing models in our space (both the business model and the financial model),” Wedbush analysts wrote.

“While there is an intriguing long-term growth opportunity here, the trajectory of the business is very hard to gauge, and we would not view this pullback as a buying opportunity,” they added.

Write to Emily Dattilo at [email protected]