Things are going from bad to worse for Farfetch (NYSE:FTCH) this week as investors continue to fear that a lack of emergency access to financing could doom the luxury fashion e-commerce company. This week's decline follows a sharp drop in the stock after shares plummeted more than 50% on Nov. 28 when Farfetch announced that it would not release its third-quarter earnings report as previously scheduled for Nov. 29. Such a delay can signal accounting irregularities, a pending acquisition, or other problems.
At the same time, reports began circulating that founder and CEO José Neves was aiming to take the company private, but he appears to be unable to secure the needed financing. Richemont, the Cartier parent and strategic partner of Farfetch, said earlier that it has no financial obligations to Farfetch and does not expect to lend to or invest in the e-commerce platform.
This week, the stock continued to sink as the company's future remained in limbo. As of Thursday at 2:15 p.m. ET, the e-commerce stock was down 40.7%, according to data from S&P Global Market Intelligence.
Image source: Getty Images.
Farfetch is still floundering
The major event that seemed to push Farfetch stock down this week was a downgrade from Moody's due to the cancellation of the earnings call. At this point, the longer Farfetch goes without a buyer or without reporting third-quarter earnings, the further the stock is likely to fall, as investors are dealing with a great deal of uncertainty.
Last week, the company announced that Alibaba President J. Michael Evans had resigned from the board as a result of the arm's length commercial relationship between Alibaba and Farfetch. Farfetch has not made any other filings with the SEC since then, though as a London-based company, it's not subject to the same reporting requirements as U.S. companies.
The stock did get a momentary boost on Wednesday on reports that Apollo Management was potentially interested in taking a stake in Farfetch.
What's next for Farfetch?
After a boom during the pandemic, Farfetch has struggled in the reopening with flat growth and mounting losses. The e-commerce company is now reportedly looking to secure $500 million in funding to stay afloat, but it's clearly struggling to find it.
While the e-commerce stock would soar on news of a rescue deal, it seems likely to fall further while investors await any news, especially since it's unclear why the company hasn't yet reported third-quarter earnings, which are now more than two weeks late.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Alibaba Group and Farfetch. The Motley Fool has a disclosure policy.
