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Farfetch stock forecast: the fashion store of the future?

By Prachi Sinha

Edited by Vanessa Kintu

16:44, 14 January 2022

New York City - September 21, 2018: Banner on the New York Stock Exchange building celebrating the IPO of the on line fashion house Farfetch in Lower Manhattan.
Farfetch stock forecast: the fashion store of the future? – Photo: Shutterstock

A global platform for the luxury fashion industry, Farfetch (FTCH) began in 2008 as an e-commerce marketplace for luxury boutiques around the world. A decade later, in September 2018, it went public on the New York Stock Exchange (NYSE) and issued around 33.6 million new shares.

Farfetch has grown from an e-commerce marketplace to a leading global brand for luxury fashion. It connects to customers in more than 190 countries and has offices all over the world including London, Portugal, New York, the UAE and Brazil. Farfetch’s additional businesses include Browns, New Guards Group and Stadium Goods. As of 9 December 2021, it also acquired resale platform LUXCLUSIF for an undisclosed sum.

However, the company has had a disappointing start to 2022 so far. In the first week of trading, the FTCH stock fell by 22.18% to close at $26.65, as of 13 January 2022. The stock had in fact been on a downward trend in the last three months of 2021. From a close price of $37.50 on 1 October 2021 to ending the year at $33.43, making for a 10.85% drop.

Recently, Farfetch has been in advanced discussions with Richemont, a Switzerland-based luxury goods holding company, to take a step further toward digitisation of the luxury fashion industry.

In this article, we catch up on the latest Farfetch stock news and get analyst insights about the Farfetch stock prediction.

Stock fundamental analysis

On 18 November last year, the company released its third quarter 2021 financial results, reporting more than $1bn in gross merchandise value (GMV). As compared with Q3 2019 levels, the group has more than doubled its GMV. All of its three business segments of digital, brand and in-store, reported increased GMV as compared with Q3 2020 levels.

The primary contributor to the company’s top-line remains its digital platform, which reported a GMV of $828.5m in Q3 2021, a 22.9% increase on the digital platform GMV of $674.1m for Q3 2020.

However, the company did not generate a positive cash flow from its operations for the three months ended September 2021 – and it had significantly increased compared with the same period in 2020. Cash outflow for Q3 2021 was $409.7m compared with $84.6m for Q3 2020.

With respect to Farfetch’s gross profit numbers, the company reported $252.2m gross profit in Q3 2021 – this represented an increase of approximately 20.66% compared with Q3 2020’s gross profit of $209m.

Elated with the gross asset value numbers, Farfetch’s founder, chairman and CEO José Neves said:

“I’m thrilled by Farfetch’s continued track record of delivering aggressive market share capture as we accelerated two-year stack Digital Platform GMV growth to 97% in the third quarter, and remain on track to achieve our goal of full-year Adjusted EBITDA profitability and GMV growth above our long-term 30% CAGR target.”

Stock price news

In collaboration with its previously acquired New Guards Group, Farfetch has developed a line of elevated wardrobe essentials called There Was One (TWO). Marketed as an environment-conscious clothing line, TWO apparel is delivered in minimal recyclable packaging.

Launched on 20 October 2021, this sustainable, digital-only brand is exclusively available on the Farfetch Marketplace. Following the announcement, FTCH stock jumped by nearly 5% the next day, from $40.16 to $42.13.

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In 2020, with nationwide lockdowns imposed due to Covid-19, shopping experiences moved online from retail stores for most people. As a result, FTCH stock jumped 474.34% in the year. From a closing price of $11.11 on 2 January, the stock closed 2020 at $63.81.

With vaccination campaigns under way and the worldwide economy on the mend, the Farfetch stock couldn’t keep up with its 2020 returns. While the stock did touch its highest close price yet of $73.35 on 19 February 2021, it’s fallen by 46.08% during 2021, down from $62 on 4 January to $33.43 on 31 December.  

Farfetch stock price chart

A piece of positive news for Farfetch shares has been the company’s recent discussions on coming together with another online luxury retail brand Yoox-Net A Porter (YNAP).

Farfetch is expected to gain a minority stake in YNAP’s business, leading toward building more synergies within the luxury fashion market. Richemont-owned YNAP will also benefit from Farfetch’s Platform Solutions to transition to a hybrid 1P/3P business model.

On 12 November 2021, the markets responded positively to Richemont’s confirmation of its advancing strategies with Farfetch. In a single-day jump the stock rallied by 17.66%, from $39.41 on 11 November to $46.37.

Future price forecasts

Sharing a technical perspective from the FTCH stock chart, Milan Vaishnav, CMT, MSTA, a consulting technical analyst at Gemstone Equity Research and Advisory Services, says:

“This stock is under a secular decline from 73 levels. It has been under multiple falling channels and presently shows no triggers on the chart which may invite any fresh entry in the stock. However, if traders intend to catch any ‘swing’ move, they can do it by entering in the 29.40 to 31.50 zone and maintaining a strict protective stop below 26.50. The relative strength index (RSI) is showing a bullish divergence against the price. While the price formed lower lows, the RSI did not. This resulted in a bullish divergence of the RSI against the price. Volumes have increased near the lower levels. This is not a strong indication though, but a subtle hint that a ‘potential’ bottom may be in place for the stock.”

According to the algorithmic forecasting of Wallet Investor as of 14 December 2022, the Farfetch share target price could increase to the range of $91.00 to $91.98 in December 2025, three years from now. Additionally, in its Farfetch share price forecast, it was mentioned that the price could potentially close at $41.68 by December 2022.

Based on the data compiled by Market Beats as of 14 January 2022, out of 12 analysts, nine rated the FTCH stock as buy, one suggested sell and two recommended to hold. Their consensus 12-month FTCH share price forecast target is $53.67 a share, the stock price projection varying from the low of $32 to the high of $77. The current analyst price target consensus has an upside of 101.38%, based on the closing price of $26.65 as of 14 January 2022.

On 27 August 2021, Ike Boruchow from Wells Fargo upgraded FTCH’s stock rating to a strong buy, at a price target of $55. Stephen Ju, from Credit Suisse, maintains a buy rating on the stock and has a price target set at $71 as of 19 November 2021. However, on 10 December, Abhinav Sinha from Societe Generale initiated its coverage on Farfetch stock and suggested a strong sell with a price target at $32.

When looking for FTCH stock forecast, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Farfetch stock analysis is based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results.

FAQs

Is Farfetch a good stock to buy?

According to Market Beat, nine analysts have given this stock a buy recommendation. As of 18 November 2021, it has reported strong Q3 2021 financial results and is currently advancing discussions with Richemont-owned YNAP to build more synergies in the luxury fashion markets.

Note that analyst predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you cannot afford to lose.

Will Farfetch stock price go up or down?

According to an algorithmic-based application, Wallet Investor, the share price for FTCH could go as high as $91.98 as of December 2025.

However, it should be remembered that analysts’ forecasts can be wrong and have been inaccurate in the past.

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