Farfetch Limited (NYSE:FTCH) shares plummeted more than 39.5% in pre-open Friday after the company delivered weaker-than-expected guidance.
Revenue of $579.35 million (down 1.3% year-over-year) came in worse than the consensus estimate of $648.27M. EPS was reported at ($0.21), compared to the consensus estimate of ($0.28).
Q2 GMV rose 1.2% year-over-year to $1,032.6M, with Digital Platform GMV growing 6.9% year-over-year to $944.3M, and Brand Platform GMV decreasing 40.8% year-over-year to $63.4M.
“We have also taken decisive action to adapt to the macro environment of the last 18 months. 2023 is set up to be a great year for Farfetch, toward strong GMV growth, Adjusted EBITDA profitability and positive free cash flow,” CEO José Neves.
For the full 2023 year, the company expects revenue of $2.5 billion, worse than the consensus estimate of $2.8B. Group GMV is seen at approximately $4.4B, down from the prior $4.9B and below the consensus of $4.83B. Digital Platform GMV of $3.85B, and Brand Platform GMV of $0.45B.
JPMorgan analysts cut the rating to Neutral from Overweight with a price target slashed by $9 to $6 per share.
"Weakening trends through the back half of 2Q make it clear that FTCH has limited near-term visibility, & execution risk increases on a much bigger business once the YNAP-Richemont deal closes. The after-market move may prove overdone, but we think FTCH needs to put together multiple quarters of execution to regain credibility," they said.
KeyBanc analysts downgraded to Sector Weight on limited visibility.
"We continue to like FTCH's LT potential but are downgrading it to Sector Weight based on decreased confidence in execution/heightened risk to FY23 profitability and MT targets," the analysts said.
(Additional reporting by Senad Karaahmetovic)