What Happened:
Shares of online luxury marketplace Farfetch (NYSE: FTCH) jumped 12.4% in the after-market session after the company reported first-quarter results that beat analysts' expectations for revenue and earnings per share. Gross merchandise value (GMV) also beat by nearly 4%. Additionally, GMV guidance for the full year was nearly 3% ahead of Consensus. While adjusted EBITDA in the quarter was relatively in line, full year guidance was ahead. Overall, the quarterly results were quite positive, especially after the prior quarter showed a worrisome year on year decline in revenue but this quarter broke that trend, showing positive growth. Management capped the solid quarter with comments about a commitment to "a return to profitability and positive free cash flow."
What is the market telling us:
Farfetch's shares are very volatile and over the last year have had 96 moves greater than 5%. But moves this big are very rare even for Farfetch and that is indicating to us that this news had a significant impact on the market's perception of the business.
Farfetch is up 17.5% since the beginning of the year, but at $5.14 per share it is still trading 57.3% below its 52-week high of $12.03 from August 2022. Investors who bought $1,000 worth of Farfetch's shares at the IPO in September 2018 would now be looking at an investment worth $182.07.
Is now the time to buy Farfetch? Access our full analysis of the earnings results here, it's free.