Poshmark app screenshots. Courtesy.
The resale marketplace, listed as POSH on the Nasdaq index starting Thursday morning, set an original price range of $35 to $39 per share. The outperformance — which mirrors that of many other online retailers that boomed right out of the gate — speaks to investor interest in the resale sector.
“Already today, Poshmark is the future of shopping,” Poshmark cofounder Tracy Sun cofounder, told BoF on Thursday. “We’re at the intersection of three really key trends,” she said, pointing to the rise of e-commerce, social commerce and resale at large.
With a market capitalisation of $2.7 billion, Poshmark will prioritise growing its base of 32 million active users, adding new product categories (it launched home recently), innovating the user experience on its app and website, as well as building enterprise-grade tools for its largest sellers, Sun said.
As a peer-to-peer platform, Poshmark doesn’t carry any inventory, which has in part enabled it to reach profitability last year — still a rarity among online resellers. Instead of photographing and listing products on the backend, these expenses are absorbed by the buyers and sellers. As a result, Poshmark can offer an attractive commission rate for sellers: 80 percent of all purchases $15 and over.
According to its SEC registration forms, Poshmark posted sales of $247.5 million and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of $17.5 million in the four quarters ending on September 30, 2020. Its gross merchandise value — or the cost of goods sold on the site — totaled $1.3 billion in that same period, compared to $1 billion the previous year.
The resale landscape, nonetheless, is becoming more crowded. Poshmark competes with eBay and ThredUp, which is also slated to go public in the coming weeks, while a number of international resale companies, including Depop and Vinted, are planning aggressive international expansion as well.
Poshmark, like any company new to the public market, will have prove the viability of its business model. Online fashion marketplace Farfetch, which also carries minimal inventory, exceeded its price target by as high as 39 percent on its opening day in 2018, but its shares proceeded to lose more than half their value in the following year.
Poshmark has a competitive advantage of already being available in 98 percent of all American zip codes, Sun said, as well as its social networking components. The average user spends 27 minutes on the Poshmark app everyday, she added.
At time of publishing, Poshmark’s shares traded at about $96.