Bernstein Liebhard LLP, a law firm known for representing investors in securities class actions, has set a December 19, 2023 deadline for investors to file a lead plaintiff motion in a lawsuit against Farfetch (NYSE:FTCH) Limited. The suit alleges that the luxury fashion online platform violated the Securities Exchange Act of 1934 by making misleading statements about its business operations and financial health.
The period in question spans from March 9, 2023, to August 17, 2023, during which Farfetch is accused of obscuring a significant downturn in its key markets of the U.S. and China. Additionally, the company allegedly underreported problems arising from its partnership with Reebok and ongoing supply chain difficulties. These alleged misrepresentations came to light following Farfetch's release of its second-quarter financial results on August 17, 2023.
In these results, Farfetch reported revenues of approximately $572 million, starkly missing market expectations which had anticipated revenues closer to $650.71 million. This shortfall prompted the company to adjust its full-year 2023 revenue forecast down to about $2.5 billion, a figure that falls below both its previous projection and average analyst estimates.
The subsequent market reaction was swift and severe. On Friday, August 18, 2023, Farfetch's stock price plummeted by more than 45%, closing at a mere $2.61 per share. This drastic decline represented a significant loss in shareholder value and underscored the gravity of the situation for investors.
Investors who acquired Farfetch securities within the identified timeframe and have been affected by the stock's decline may seek to participate in the class action as a lead plaintiff. Bernstein Liebhard boasts an impressive history of securing favorable recoveries for its clients, with more than $3.5 billion recovered since the firm's founding in 1993.
Those considering taking on the role of lead plaintiff have until the December deadline to file their motions. This lawsuit serves as a critical reminder of the importance of corporate transparency and accountability, particularly within the volatile landscape of luxury fashion e-commerce.
InvestingPro Insights
From the InvestingPro platform, we have some key data points and tips that may shed further light on Farfetch's situation. As of Q2 2023, Farfetch had a market cap of $581.34 million, a negative P/E ratio of -0.65, and a revenue of $2351.01 million. The firm's operating income was deeply in the red, with a figure of -$766.86 million. The stock's performance over the past three months has been notably poor, with a total return of -74.9%.
InvestingPro Tips suggest that Farfetch operates with a significant debt burden and is quickly burning through cash. The stock has taken a big hit over the last week and generally trades with high price volatility. These indicators align with the recent lawsuit allegations and the significant downturn in Farfetch's key markets.
For investors seeking deeper insights, InvestingPro offers a plethora of additional tips and metrics. For instance, there are 15 more tips available for Farfetch and countless other real-time metrics. These could provide a more comprehensive understanding of the company's financial health and market position.
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