In this video, I'm going to talk about Farfetch (FTCH +0.00%), the $15 billion luxury goods company. The stock is down 33% year to date but down 40% since its February high despite growing revenue at 40%. You can find the video below.
Luxury market
According to Verified Market Research, the global personal luxury goods market will grow at a 5.20% compound annual growth rate from 2020 to 2028, by which time it will be worth $120 billion. By 2025, the global sneaker resale market size will be as big as $6 billion, and Farfetch owns Stadium Goods, a retailer specializing in the resale of sneakers. Farfetch directly gains from a popular secondary market because it will create FOMO (fear of missing out) and make people buy the shoes as fast as they can.
China opportunity
By 2025, 40% of total luxury sales will be done by Chinese customers. In August, Farfetch signed an agreement to enter into a global strategic partnership with Alibaba Group and Richemont. Both companies will invest $250 million in Farfetch China. This partnership will aim to provide luxury fashion brands with enhanced access to the China market. This will give Farfetch a very big competitive advantage over its peers, as China was responsible for 90% of 2020 luxury goods purchases growth.
For the full insights do watch the video below.
*Stock prices used were the closing prices of Sept. 24, 2021. The video was published on Sept. 27, 2021.
