Farout: Luxury marketplace Farfetch’s shares surge 53% in its first day as a public company

Online luxury goods giant Farfetch has reached a $6.2B valuation after shares rose more than 50% in its IPO.

September 24, 2018

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.

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