Virgil Abloh takes a bow after the Off-White spring 2020 show.

A good night’s sleep didn’t improve investors’ mood over Farfetch.

The London-based company’s stock held onto losses logged in after-hours trading Thursday and closed down 45 percent to $10.13 Friday as Wall Street’s taste for the onetime stock market darling soured.

Traders appeared to be fretting over Farfetch’s triple reveal after the market closed.

Just as the company recorded wider second-quarter losses, fueling concerns about just when the company will become profitable, it announced that it had acquired brand platform New Guards Group, the licensee of Virgil Abloh’s Off-White brand, for $675 million. Not done, Farfetch also told investors that its longtime chief operating officer Andrew Robb would be leaving the company after nine years only one year after its initial public offering.

Ike Boruchow, a senior analyst at Wells Fargo, said: “What was supposed to be a simple investment thesis (industry-leading top-line growth with structural industry tailwinds) has become increasingly complicated and controversial over the past few months — and Farfetch’s second-quarter print was disappointing and, more importantly, ratcheted up the complexity by several notches.”

In particular, he said Farfetch’s reduced guidance on gross merchandise value for the second half of the year was “extremely surprising and disappointing.” He had expected it to increase, primarily due to the platform’s push into China and a normalization of margins.

As for the acquisition — the third this year after Stadium Goods and Toplife, Boruchow said it raises questions as to how these businesses all fit into Farfetch’s model and how management can integrate them all without taking their eye off the ball.

This echoed concerns of Bernstein luxury goods senior analyst Luca Solca, who noted that the business remains far from making a profit, while continuing to reduce GMV guidance.

“This happens despite the recent acquisition of Top Life, which should provide tailwinds in the [second half] in China,” he said. “The changing perimeter of the business — and its rising exposure to first-party risks — [are] clouding the picture. Investors will have a harder time to verify that the underlying business model actually works and leads to profitability, eventually.”

Giving his thoughts on the stock tumble, Jonathan Blackledge, an analyst at Cowen, said investors were caught off guard given New Guards is arguably a collection of brands, contrasting with Farfetch’s platform approach to luxury online fashion.

“Key risk factors in our view include sustaining attractiveness of these brands for long-term growth and the risk that brands such as Off White may be near peak popularity,” he said. “That said, we’re willing to give management the benefit of the doubt and think the selloff (much of which was ostensibly tied to the New Guards announcement) was an over-reaction.”

Wells Fargo’s Boruchow concluded that while it’s clear that the story has changed meaningfully since the IPO, and Farfetch shares are headed to the “penalty box,” there’s still a structural story underlying the stock.

“Luxury is under-penetrated online, demographic trends are favorable for online players and there is a huge opportunity for the company in China,” he said. “So, we’re sticking with our outperform rating on the shares — though it’s no longer our top pick in the space, and we’re significantly reducing our [fiscal year 2019 and 2020] adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] estimates to losses of $140 million and $125 million, respectively,” he said.

Read more here:

Farfetch Stock Plunges After Acquiring Off-White Licensee in $675 Million New Guards Deal

Farfetch.com Acquires London Boutique Browns

JD.com to Merge Toplife with Farfetch China

Virgil Abloh Talks Work, Life — but Not Politics

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