Stocks that unite two of the world’s most successful industries, European luxury and American tech, might sound like winners. Instead, companies that sell luxury goods online have turned into quicksand for investors.

After a sales boom during the pandemic, online luxury stores are grappling with flagging demand and widening losses. Two New York-listed players, Farfetch and MyTheresa owner MYT Netherlands Parent, have lost around 90% of their market value since initial public offerings in 2018 and 2021, respectively.