How did Farfetch Shares End Up among Penny stocks, and Is It a Moment to Buy?

<p>What
springs to mind when you hear something about Farfetch? Likely, it conjures
images of stylish looks with luxury brands like Balenciaga, Burberry, and
Prada. Some of these outfits might be more expensive than what you have in your
investing portfolio (sorry). Simply put, Farfetch associates with various
pricey stuff, so it’s hard to imagine the company's shares could end up being
in a penny-stocks list. But guess what? It happened, and we are about to find
out why.</p><p>Back
then, when Farfetch went public in 2018 or at its peak during the pandemic in
2021, the company hardly expected that it might be among low-priced stocks.
However, penny stocks may be a source of inspiration, if you know what you're
looking for. And that's where <a href="https://www.tradingview.com/screener/" target="_blank" rel="follow">stock screener</a> comes in handy. This tool helps
you find stocks that match your criteria and gives you a list of assets to dig
into further.</p><p>This
whole not-too-long journey is laid out in the chart below. You can see when
Farfetch had its IPO, the moment of fame, and not-so-great present. </p><p>And then
there's the next chart, which shows the most recent drop – a staggering 45% in
just one day. </p><p>Farfetch’s
Q2 financial report turned out to be worse than expected. Instead of $648
million revenue, the <a href="https://ceo.ca/@TradingView/nuages-au-paradis-lvmh-stock-slump" target="_blank" rel="follow">luxury fashion giant</a> reported only $572
million, which is 12% lower than estimates.</p><p>To make
things worse, Farfetch admitted that the total value of orders on the Farfetch
platform is unlikely to meet the expectations. The full-year forecast was
consequently revised downward, dwindling from $4.9 billion to $4.4 billion.</p><p>Why are
the numbers so disappointing? Well, among the reasons is the fact that sales
haven't bounced back as much as they hoped and less-than-expected demand in
China. </p><p>After
the report came out, analysts started lowering their target price for Farfetch
one by one. Yet, they are not hurrying up to give up on the company's potential
in the market. Of course, the sales recovery will take a while, and this might
not happen in just the next quarter or two. But this doesn’t mean Farfetch
can’t be a good long-term buy, especially at its current lower price. </p><p>Let’s
check how different analyst companies have adjusted their forecasts. For
example, Wedbush went from predicting $5 to $3.5, JPMorgan from $15 to $6,
Credit Suisse from $12 to $10, and Citigroup from $4.3 to $3. As you see,
target prices decrease, but they are still higher than the current price of
$2.71, so…</p><p>Ultimately,
it's up to you to do your own research and figure out whether Farfetch could be
a smart investment right now or not. That’s the only way to find success in the
world of markets.</p>

This article was written by FL Contributors at www.forexlive.com.