Poshmark Makes its Public Debut
The IPO Market Shows No Signs of Slowing Down
Poshmark (POSH), an online marketplace specializing in clothing and accessories, made its public debut yesterday. The company priced its shares at $42 each—above its initial target range of $35 to $39. At the end of the trading day its shares were up almost 150%.
As 2020 came to a close, the IPO market was roaring with blockbuster debuts from companies like Airbnb (ABNB) and DoorDash (DASH). So far in 2021, it shows no signs of slowing down. Shares of online payments company Affirm (AFRM) surged almost 100% on Wednesday. Pet supply company Petco (WOOF) also had a successful IPO yesterday.
Poshmark’s Business Model
Poshmark is a platform which connects buyers and sellers much like eBay (EBAY) or Etsy (ETSY). To make money, these companies take a cut of each transaction. On Poshmark users can buy and sell anything from $15 coffee cups to $3,000 handbags.
Poshmark currently has 31.7 million active users. Over the first three quarters of 2020, the company’s revenue was $192.8 million—a 28% increase compared to the same period a year prior. Poshmark also made a profit of $20.9 million during the first three quarters of 2020 after losing $33.9 million the previous year.
The majority of Poshmark’s users are millennials or members of Gen Z. This means that if the platform is able to retain this audience and continue to attract new, younger users, it could be poised for growth.
Poshmark has seen a spike in its user numbers during the pandemic for a number of reasons. Both buyers and sellers are at home looking for ways to entertain themselves. More people are buying clothing online because they are not visiting brick-and-mortar stores as frequently. Additionally, people are selling clothing online to make extra money at a time of economic downturn.
Poshmark’s leadership expects that though the pandemic has led to a unique set of favorable conditions for the platform, it could see even more growth in the year ahead. If vaccine rollout is successful and social distancing measures can be reduced, Poshmark users may be eager to buy clothing when they return to in-person work and school.
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