Does Farfetch have to spend so much to make money?
When Farfetch made its $6bn debut on the New York Stock Exchange last September, the online marketplace was unlikely to predict it would face legal action from disgruntled investors less than a year later.
However, cut to August 2019 and the luxury fashion specialist’s market capitalisation has fallen to little more than $3bn after posting a wider than expected loss after tax of $89.6m (£73.3m) for the second quarter of its financial year, compared with $17.7m (£14.6m) during the same period the previous year.
Adjusted EBITDA losses also spiralled to $37.6m (£31.1m) in the quarter, compared with $25.4m (£21m) the previous year.
Despite a healthy 43% spike in revenue to $209.3m (£172.1m), Farfetch has come under fire as US law firms – Hagens Berman, Holzer & Holzer, Glancy Prongay & Murray, Johnson Fistel and Howard G. Smith – issued alerts to investors to join class actions against the business.
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