Farfetch Shares Tumble as Company Lowers Forecast

Shares of Farfetch, the luxury fashion e-commerce company, took a nosedive following the release of its mixed second-quarter results and updated forecast on the value of orders processed.

The report, issued on Thursday, resulted in KeyBanc Capital Markets analysts downgrading Farfetch (ticker: FTCH) shares from Overweight to Sector Weight due to concerns over execution and profitability timelines.

In premarket trading on Friday, Farfetch stock plummeted by 40% to $2.84.

During the second quarter, Farfetch reported revenue of $572.1 million, which was a decline from the previous year and well below Wall Street’s expectation of $648.7 million. The company also posted an adjusted loss of 21 cents per share, which remained steady from the same quarter last year but was narrower than the anticipated 28-cent loss projected by analysts.

Farfetch CEO, José Neves, stated in the earnings release that the company's Q2 results demonstrated growth, increased efficiency, and successful execution of key strategic priorities. Neves added, "We have also taken decisive action to adapt to the macro environment of the last 18 months."

As part of its updated forecast, Farfetch reduced its full-year guidance for group gross merchandise value from $4.9 billion to $4.4 billion. This downward revision prompted the KeyBanc analysts to express concerns about the challenging second half of the year given softer trends.