Jim Cramer Recommends Selling These 5 Stocks

2. Farfetch Limited (NYSE:FTCH)

Number of Hedge Fund Holders: 45    

Farfetch Limited (NYSE:FTCH) is a UK-based firm that owns and runs an online marketplace for luxury fashion goods. Cramer gave the stock a Sell recommendation during the Lighting Round of his show on June 7. Cramer identified Target as a much better buy in the sector compared to Farfetch when asked for his opinion on the stock. 

On May 27, Wedbush analyst Tom Nikic maintained a Neutral rating on Farfetch Limited (NYSE:FTCH) stock and lowered the price target to $8 from $16, noting that the macro headwinds for the firm could have duration. 

At the end of the first quarter of 2022, 45 hedge funds in the database of Insider Monkey held stakes worth $899 million in Farfetch Limited (NYSE:FTCH), compared to 47 in the previous quarter worth $2 billion.

In its Q1 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Farfetch Limited (NYSE:FTCH) was one of them. Here is what the fund said:

“We also initiated a position in global luxury fashion e-commerce marketplace Farfetch Limited (NYSE:FTCH) in the first quarter and took advantage of meaningful weakness in the company’s share price during the period. Farfetch previously had too large a market cap for the Portfolio, but it has since moved to a level where it’s appropriate to own it – both in this Portfolio and in our smid-cap strategy. The company’s fundamentals remain attractive as indicated by the compelling results Farfetch reported in February.

The company remains an early mover with “the world’s only truly global marketplace for luxury at scale”. Farfetch Limited (NYSE:FTCH) has broader reach around the world with a diversity of brands that is much larger than its competitors. Many of the items it sells are exclusive. Our research shows that its brand assortment, brand image, geographic breadth, an inventory-light business model, a more compelling offering for luxury partners, and artificial intelligence are all competitive edges for the company. We believe Farfetch is well-positioned for the continued market share shift from offline to online in this category. The personal luxury goods market has trailed other categories in online penetration, but consumer behaviors and preferences shifted as a result of the pandemic creating more comfort with purchasing goods like this online. Changed behavior and the general shift to a higher portion of Millennial and Gen Z luxury shoppers supports this continued shift as does the growth in emerging market demand.”