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Farfetch is reportedly in talks to become a private company

The hypothetical withdrawal from the New York stock exchange to relaunch the company

Farfetch is reportedly in talks to become a private company The hypothetical withdrawal from the New York stock exchange to relaunch the company

After witnessing a sudden market value drop from $73 to $1.71 within a year, José Neves, the founder of the luxury e-commerce platform Farfetch, is reportedly in talks with bankers and shareholders to delist the company and delist it from the New York Stock Exchange. Among the investors is Richemont, the conglomerate of high-profile brands such as Cartier, Van Cleef, and Yoox Net-a-Porter. According to a report from the Telegraph, Neves may make the announcement this week when Farfetch is expected to release its quarterly results. Support for this move is also coming from the Chinese company Alibaba, which, along with Richemont, invested $300 million in the platform three years ago, in addition to $250 million for a stake in its Chinese subsidiary. Neves founded Farfetch fifteen years ago in London and currently holds a 15% stake in the company and 77% of the voting rights.

Farfetch's market value has plummeted by over 80% since its 2018 stock market debut, but since hints emerged about a potential delisting, it has grown by 22%. Following the Telegraph's announcement of this possibility, the company stated that it would not release financial results for the third quarter. Farfetch is now worth $581 million, and since the acquisition of New Guards Group in 2019 it has lost more than $2 billion as the group's sales declined (-40%) of the owner of the licence for Off White and Palm Angels. Since then, Neves' company has completely lost the trust of its investors; according to the Telegraph, Farfetch has "drastically changed its strategy, moving from a low-risk model with front-end sales to a company that owns brands, stores, and shares. Speculative funds began heavily selling the company's shares." Neves defended himself by stating that the true results of the New Guards Group acquisition would be evident years, not months, later. However, this strategic decision that destabilized investors was compounded by excessive cost increases, further fueling shareholder fears. During the first six months of 2023, Farfetch lost $455.6 million on revenue of $1.1 billion.

The delisting of Farfetch would come just one month after antitrust authorities approved the acquisition of an almost majority stake (47.5% with the completion of ownership transfer within three to five years) of Yoox-Net-a-Porter, its main market rival owned by Richemont. The deal would significantly boost Farfetch's merchandise volume, allowing the platform to resell products worth approximately $3 billion gross. At this point, it is unclear what will happen with the upcoming Yoox acquisition; delisting could change the fate of the company. Withdrawing from the stock exchange would grant Farfetch the chance to step out of the spotlight and act on the sidelines, which could open up new opportunities for redemption for the failing company since it would no longer have to be accountable to shareholders, being able to take advantage of some shortcuts. Within the industry, Farfetch's model has created quite a few discontents since it puts the discount policies of very different stores under one roof and therefore ends up stepping on each other's toes and trampling on the feet of brands that can see their merchandise discounted sometimes even abritrionally, while retailers, who have to deal with shipping and returns, see no real gains from participating in the group's model. Added to this is the issue of gray markets, or often unsold goods that are outsourced to unauthorized wholesalers further undermining a now unsustainable pricing system.