Poshmark (Nasdaq: POSH) is down by more than 50% since going public in January. The company has been a victim of the selloff in tech that has been particularly brutal for IPOs and e-commerce stocks. The company went public when conditions were especially amenable for growth stocks as it climbed by more than 140% on its first day of trading. However, this marked a high for the company as its consistently trended lower since then.
Its current price gives it a valuation of just over $3 billion. In 2020, the company brought in $248 million, resulting in a $21 million profit, which was a 34% increase from 2019, when the company lost $34 million.
Company Profile
Poshmark was founded in 2011 by Manish Chandra in Redwood City, California. It offers an online marketplace for second-hand clothing, shoes, and accessories, earning a cut of every transaction. Thus, many are using eBay (Nasdaq: EBAY) and Etsy (Nasdaq: ETSY) as comps for the company as they have similar business models. Currently, Poshmark has 4.5 million sellers on its platform, 6.2 million active buyers, and 31.7 million active users.
However, Poshmark focuses on a particular niche and has gained traction among Generation Z and Instagram (NASDAQ: FB) influencers. Of course, like many e-commerce companies, it saw a sharp increase in use during the pandemic. However, the company believes that it will see an increase in sales of formal attire and shoes as the economy reopens which could offset a decline as people resume normal shopping habits.
These marketplaces for used items have gotten very popular in recent year and seems to fit with many people's desire to live a more sustainable lifestyle by minimizing waste. Poshmark also offers 'social commerce' features that have been successful in boosting retention and engagement.
Stock Price Outlook
Poshmark is certainly an intriguing company that should be on investors' radars. The company's stock price has been weak since its IPO due to general market conditions and potentially some profit-taking.
However, the company is one of the leaders in its niche, and marketplace stocks have a good track record of success given the potential for growth and high margins. Once, market conditions improve for growth stocks, then Poshmark has many of the characteristics of an outperforming stock.