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Farfetch IPO: initial notes on valuation and overview of European eCommerce

Farfetch is eyeing an IPO in the US (possibly its largest market) with a rumoured valuation up to $5 billion. How to put that valuation into perspective?

Farfetch’s 2016 revenues were £151M, up 74% from 2015.  If Farfetch’s todays revenues are somewhere in the region of $500 million (just a calculated guess) that would imply a revenue multiple somewhere around to 10x. Most European eCommerce companies like Zalando, Asos, and Yoox Net-a-Porter are valued far lower: 1.5x to 2.5x revenues.

But Farfetch does not see itself as an eCommerce company. Farfetch connect consumers with fashion boutiques, similar to the way Booking.com connects travelers with hoteliers. And similar to Booking.com, Farfetch provides merchants with tools to succeed and to manage their inventory. It will argue that it should be valued similar to Booking.com (Priceline), which is trading at 7-8x revenues, partly thanks to its ~40% EBITDA margins.

To make a conclusion, it’ll be super interesting to review Farfetch’s business model economics, which is what the investment banking analysts (Goldman, JP Morgan) are doing. In the meantime, below is a list of Europe’s most valuable ecommerce companies:

Most Valuable eCommerce Companies

 

Looking to the future, what else is on the horizon in European eCommerce? Be sure to check Europe’s fastest hiring in eCommercefast growing eCommerce websites, and below venture capital investment in eCommerce:

2017 VC investments in eCommerce

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