Why Is Farfetch (FTCH) Stock Up 20% Today?


  • British e-commerce firm Farfetch (FTCH) may be getting a lifeline.
  • The struggling company is in talks to procure an emergency funding package.
  • Details are still being released and parts of the pending deal remain unknown.
FTCH stock - Why Is Farfetch (FTCH) Stock Up 20% Today?

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Farfetch (NYSE:FTCH) stock is rising today on news that the company is moving to secure emergency funding.

According to recent reports, the U.K.-based e-commerce firm is in talks with private equity leader Apollo Global Management (NYSE:APO) to procure an emergency funding package in an attempt to “shore up its finances.” But according to British media outlet Sky News, Apollo isn’t the only company that may be coming to the aid of Farfetch. Unnamed sources have told Sky that it is one of several firms with which Farfetch is having discussions.

This development has generated positive momentum for FTCH stock, but it raises some questions as to the company’s future.

What’s Happening With FTCH Stock

It’s been a difficult week for Farfetch and an even worse month. After falling almost 45% over the past 30 days, it’s not a stretch to say that the company could certainly use the momentum. Today, it has finally pulled back into the green. As of this writing, shares are up about 20% for the day, and despite some volatility, they remain on an upward trajectory.

The company’s recent problems predominantly stem from declining industry sentiment toward FTCH stock. Yesterday brought even more bad news as a harsh downgrade from Moody’s pushed shares down even further. As InvestorPlace contributor Chris MacDonald reports:

“Shares of FTCH stock hit a fresh new all-time low today on news that Moody’s downgraded the company’s credit rating to Caa2. This rating downgrade is significant, as it means the company’s ability to raise capital in the debt markets will likely be greatly hindered. Caa2 is well into junk territory as The Business of Fashion notes and, given where interest rates are, this is a situation no company wants to be in currently.”

With such a dire outlook, it makes sense that Farfetch would be seeking emergency funding. However, some key details remain unknown. As Sky also notes, it still isn’t clear if the new funds would take the form of debt, equity or both. Until the company confirms an emergency funding package, the firm providing it, and how the new funds will be provided, FTCH stock isn’t likely to experience any serious momentum. And even then, it will be a long road back to the top.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Samuel O’Brient is a Reporter for InvestorPlace, where his work focuses primarily on financial markets, global economic trends, and public policy. O’Brient writes a weekly column on recent political news that investors should be following.

Article printed from InvestorPlace Media, https://investorplace.com/2023/12/why-is-farfetch-ftch-stock-up-20-today/.

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