5 Best Penny Stocks To Buy For 2024

1. Farfetch Ltd. (NYSE:FTCH)

Number of Hedge Fund Investors: 42

Out of the 910 hedge funds in Insider Monkey’s database, 42 hedge funds had stakes in Farfetch Ltd. (NYSE:FTCH). Last month, Citi analyst Monique Pollard upped her rating for Farfetch Ltd. (NYSE:FTCH) stock to Neutral from Sell.

On the other hand, BTIG cut Farfetch (FTCH) to Neutral from Buy and said the stock has become “almost unanalyzable.”

Patient Capital Management made the following comment about Farfetch Limited (NYSE:FTCH) in its Q3 2023 investor letter:

“Farfetch Limited (NYSE:FTCH) was exited in the quarter following continued disappointment in cash flow generation combined with their ever -expanding debt balance. From this point, we see serious balance sheet risk for the first time, causing us to question if the company will be able to achieve their long-term plan. We took the opportunity to realize tax losses and will continue to re-evaluate the name. More details on FTCH below.

Farfetch Ltd (FTCH) was our largest detractor in the quarter as the company massively disappointed expectations, while increasing their debt load. The lack of results and dramatic change in the risk profile over the last year forced us to reconsider the viability of our long-term thesis. With the additional $600M in term loan debt drawn down over the last year and the constant delays in true free cash flow generation (operating cash flow (operating cash flow (OCF)-capital expenditure (CAPEX)) the risk profile of the company has drastically changed from when we first owned it. From a strategic standpoint, the company has made great progress signing new deals, bringing on new partners and proving the value of their offering but their operational performance and financial discipline has sorely disappointed. While the entry of Tim Stone as CFO in September will certainly help the company, we don’t have conviction it will be enough. Debt and interest expense ($100M/annually) have exploded. Limited cash on hand ($753M by year-end), continued cash burn, a risk of a recession and $1B in debt maturities due in 2027, make us concerned about the company’s ability to invest behind and deliver against their long-term targets. We used the opportunity to take tax losses while continuing to re-evaluate the situation.”

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