Poshmark Falls as Guidance Disappoints Wall Street

Poshmark traded lower as analysts trimmed their price targets on the online retailer of used and new high-end goods.
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Shares of Poshmark  (POSH) - Get Report fell sharply Thursday after the online retailer's guidance for the second quarter prompted price-target downgrades by Wall Street analysts.

Shares of the Redwood City, Calif., company at last check fell 17% to $36.27.

The social marketplace for new and used items for people, pets and the home reported a wider first-quarter loss per share on 42% higher revenue.

Gross merchandise volume in Q1 was $441 million, up 43% from $309.3 million a year earlier.

For the second quarter, Poshmark is projecting revenue to range from $79 million to $81 million, bracketing the FactSet estimate of $80.8 million.

Analysts at Morgan Stanley trimmed their price target on Poshmark to $47 from $52 saying that "the market needed to see second-quarter guidance well ahead of consensus in order to regain confidence in the story."

Morgan Stanley has an equal-weight rating on the stock.

"While guidance implies two-year [gross merchandise volume] growth acceleration, sequentially it likely decelerates by 20% given a more difficult comparison last year," said Morgan Stanley analysts Lauren Schenk, Brian Nowak and Nathan Feather in a recent note.

Analysts at Cowen Equity Research echoed the sentiment. 

Poshmark Drops on Wider-Than-Expected Loss

The second quarter for Poshmark "is up against a difficult comparison (+42% GMV growth in [second-quarter 2020], but higher marketing spend and consumer optimism could drive better than expected results," said Oliver Chen, Jonna Kim, Max Rakhlenko and Kimberly Hong in a research note.

Cowen also cut its price target on Poshmark to $55 from $70 while maintaining an outperform rating.

Poshmark "delivered 1Q21 revenue and Ebitda beats driven by GMV growth of +43% vs. [Wall Street's] +38%, but in-line 2Q21 guidance was not enough to impress the market," Cowen added.

Cowen says Poshmark's first-mover advantage (it was founded in 2011) yields data, personalization, and scale benefits that can drive sustained 20% to 30% top-line growth via new users joining the platform and GMV per buyer growth as new categories are built out.

Analysts at Raymond James also lowered their price target on the stock, to $58 from $68. The firm has an outperform rating on the stock.

Barclays analysts Ross Sandler, Mario Lu, Trevor Young and Thomas Chadwick, said that "the market is punishing most COVID-19 beneficiaries regardless of results, but we’d argue that POSH’s apparel orientation may lead 2021 to be more of a sequential recovery year."

"The new seller tools like video listings, discounted shipping, etc., should help the overall story as the company faces tougher comps," the Barclays analysts wrote in a note.

Barclays maintained its equal-weight rating on the stock and affirmed its price target of $67.