Shares of London-based luxury marketplace Farfetch skyrocketed more than 53% in their market christening Friday — selling 44.2m shares by Thursday night (at $27 a pop).
All in all, the impressive debut branded a roughly $6.2B valuation on Farfetch’s fashion-forward behind.
Investors love a good niche market
And when that niche is luxury? Fuggetaboutit.
Farfetch got its start in 2008 helping local high-end boutiques reach wider audiences (without dealing with Amazon) and evolved into a direct-to-consumer tool for bougie brands like Gucci.
Now, it helps high-end shoppers get their hands on items (like a reported $8.2k leopard-print coat) from 700 brands and boutiques internationally, and express ships to more than 190 countries.
For being niche, Farfetch has a lot of competition
According to CNBC, “marketplace” companies often trade at a higher premium than traditional retailers, because they don’t come with the “risk of being stuck with unwanted product” — AKA, no inventory.
However, the global market for personal luxury goods is expected to reach $446B by 2025, and Farfetch already faces competition from high-end retailers like Matchesfashion.com and Net-a-Porter.
Farfetch’s edge? Exclusive contracts with over 98% of its retailers.
Though they’ve yet to reach profitability, the firm’s growth continues to track positively. Farfetch reported roughly 1.1m active consumers as of June, and brought in around $385m in fiscal 2017 — a 59% jump YoY.