Did You Miss Farfetch's (NYSE:FTCH) Impressive 197% Share Price Gain?

When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Farfetch Limited (NYSE:FTCH) share price had more than doubled in just one year - up 197%. Also pleasing for shareholders was the 91% gain in the last three months. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. Farfetch hasn't been listed for long, so it's still not clear if it is a long term winner.

Check out our latest analysis for Farfetch

Farfetch isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last twelve months, Farfetch's revenue grew by 87%. That's well above most other pre-profit companies. Meanwhile, the market has paid attention, sending the share price soaring 197% in response. It's great to see strong revenue growth, but the question is whether it can be sustained. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

Farfetch is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

It's nice to see that Farfetch shareholders have gained 197% over the last year. And the share price momentum remains respectable, with a gain of 91% in the last three months. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. It's always interesting to track share price performance over the longer term. But to understand Farfetch better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Farfetch you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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