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Down 40%, Is Farfetch a Buy Right Now?

By Neil Rozenbaum – Sep 27, 2021 at 11:00AM

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The global personal luxury goods market is expected to grow into a $120 billion one by 2028.

In this video, I'm going to talk about Farfetch (FTCH -4.96%), 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.

Neil Rozenbaum has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Farfetch Limited. The Motley Fool has a disclosure policyNeil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Farfetch Stock Quote
$4.79 (-4.96%) $0.25
Alibaba Group Stock Quote
Alibaba Group
$88.33 (-3.41%) $-3.12
$121.55 (-1.22%) $-1.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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