Farfetch started off with a quite simple proposition — and Wall Street loved it. 

But while the e-commerce platform was once a darling and seen because the strongest access point for luxury online, the image has just turn into more complicated. 

Years of acquisitions, recent initiatives and weaker-than-expected results have prompted investors to fall out of affection with Farfetch. 

The stock all the time ran cold and warm, with investors scratching their heads over one deal — just like the acquisition of Off-White licensee Latest Guards Group — after which a number of months later rejoicing over market share gains or another advance. Recently, though, the trend has been steadily downward, with the corporate’s market capitalization sinking to roughly $620 million. That’s lower than half the $1.8 billion market cap it began the yr with, and a fraction of the $25 billion it flirted with in 2021 through the go-go e-commerce days of the pandemic. 

Now, as Farfetch awaits a European Union antitrust ruling on what may need been its crowning deal to tackle Yoox Net-a-porter, the corporate is heading right into a future that’s anything but easy.  

Wall Street misses the old days.

Tom Nikic, an analyst at Wedbush Securities who has followed the luxurious platform’s stock roller coaster since before it went public in 2018, said: “The financial model was incredibly complex from Day One. However the pitch to the investment community was very straightforward.”

Nikic described the proposition as going something like this: “The posh business is underpenetrated online and, as Millennials and Gen Z come into wealth and turn into luxury shoppers, they’re way more digitally savvy and there’s going to be an enormous shift…and there’s opportunity for a world website to be the go-to place for online luxury.

“It was almost beautiful in its simplicity,” he said. “The addressable market goes to grow like a weed and we’re going to be the dominant player on this growing market.”

But as the corporate has grown, it has also layered in additional businesses and more complexity. Along with Latest Guards, it bought Stadium Goods. It acquired Violet Grey in a since-aborted bid to get into the wonder business. It sought to attach fashion to China online through a cope with Alibaba. And more.

But things simply haven’t panned out the best way investors hoped.

“The execution has been all over,” Nikic said. “It looks as if they’ve trouble specializing in one thing. Their core business, their core growth opportunity is de facto, really compelling…there’s just all these side projects which might be always happening, it’s almost like they’ve taken their eye off the ball.” 

Currently, Farfetch has been battoning down, exiting beauty and eliminating 800 jobs, or about 11 percent of its workforce, while cutting costs. Second-quarter revenues fell 1.3 percent to $572.1 million — below the $649 million analysts projected — and gross merchandise value was flat at just greater than $1 billion. Adjusted losses before interest, taxes, depreciation and amortization widened to $30.6 million from $24.2 million. 

Shortly fter that performance, Lauren Schenk, an analyst at Morgan Stanley, cut her goal price on the stock to $5 from $20. (The stock closed down 1.9 percent at $1.58 on Friday.)

But Schenk still sees the potential. 

“We proceed to trust in Farfetch’s long-term opportunity and see a positively skewed risk/reward” stock proposition, the analyst wrote in a research note to clients. 

While Farfetch’s brass attributed its second-quarter troubles to macro weakness within the U.S. and China, Schenk said: “The market is increasingly concerned it’s more structural, which is difficult to disprove within the near-term. When combined with minimal near-term profitability, this leaves the stock more likely to trade below fundamental valuation until visibility improves.” 

The YNAP would have once been considered the form of end-game Farfetch, where it consolidated much of the style e-commerce field by taking two former competitors, Yoox and Net-a-porter, on board. 

Now the deal — which regulators are expected to approve — adds one other query mark to Farfetch’s future. And the skeptics are louder than ever.  

“The Farfetch deal at this point isn’t central to the Richemont equity story in our view,” said Piral Dadhania, an analyst at RBC Capital Markets. “Many of the YNAP carrying value on Richemont’s balance sheet has been written all the way down to zero already. I believe it’s fair to say the web multibrand luxury retail model is under an important deal of pressure each at Farfetch, YNAP and more broadly. These business models — and in some cases, like Farfetch, their market value — were clearly COVID-19 winners, which have suffered post COVID-19 as shoppers have returned to physical stores on the expense of online.” 

And Luca Solca, a luxury analyst at Bernstein, said, “I cannot understand how establishing a so-called neutral platform — which in point of fact Richemont would control — is even beginning to be advantageous to luxury peers. Why would major groups — with one hundred pc DTC — wish to lend their might to construct something that, eventually, would come back to haunt them? And why would they wish to share all-important client data with competitors? Big brands have the power to draw traffic, each in store and online, hence I see a shiny future for his or her brand dot-com activities.

“Marketplaces like Farfetch can provide distribution to weaker brands, but — to be able to achieve this profitably — they should have razor thin costs,” Solca said. “Farfetch has been following too many priorities and has tried to enter too many directions. This has added to their cost base, with no profit for the underside line. I think Farfetch is ripe for a really material restructuring, whether it is to survive.”

For one, José Neves, Farfetch founder, chairman and chief executive officer, continues to consider. 

He told WWD in August: “This company was built from zero, from nothing and truly launched in 2008, amid a world financial crisis. We got our first enterprise capital money in 2010, so the primary three years were just my money, which was no money. And so we actually have that DNA of resiliency and frugality and we’ve grown this business from those humble, very humble origins to be a world platform present in all large luxury goods markets on the planet.…The North Star of this company stays absolutely intact, which is to be the worldwide platform for luxury.”