Poshmark More Than Doubles in Debut on the Nasdaq

Poshmark upped its estimated listing price to $42 a share and the stock still more than doubled in its early trades.
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Poshmark  (POSH) - Get Report opened trading at $97.50 Thursday, more than double the second-hand-apparel e-retailer's estimated IPO price of $42 a share.  

The Redwood City, Calif., company priced its IPO well above its initial estimated range between $35 and $39 per share. The shares recently were trading at $97.20. 

Poshmark is raising $277 million by selling 6.6 million Class A shares. The underwriters also have a 30-day option to buy an additional 990,000 shares. 

Led by its cofounder, president and CEO, Manish Chandra, Poshmark swung to a profit of 45 cents a share for the first nine months of 2020 from a loss of $2.81 a share in the year-earlier quarter. Revenue climbed 28% to $192.8 million from $150.5 million. 

The move to go public comes at a time when consumers are increasingly turning to online shopping amid the coronavirus pandemic. 

And Poshmark argues as well that consumers "are also shifting to more engaging and personalized experiences, fueled by the rapid growth of social platforms." 

In a Securities and Exchange Commission filing, Poshmark said that for buyers it creates a social experience. "We enable buyers to discover, connect, and curate their network and news feed with that of other users who share similar styles and personal preferences," the filing says. 

Poshmark says it aims to make selling easy for merchants, with comprehensive infrastructure and a transparent fee structure. Sellers pay Poshmark 20% of final prices for sales $15 and more, or a flat $2.95 for sales under $15.

The average order value on the Poshmark marketplace in 2019 was $33, the filing says.

The Wall Street Journal points out that ThredUP, an online thrift store and rival to Poshmark, filed confidentially to go public in October; and luxury retailer Mytheresa Group said this week it would make its debut at an about $1.6 billion valuation. 

And the three companies follow online luxury-goods-consignment company RealReal,  (REAL) - Get Report which went public in 2019.

Poshmark lists a number of risk factors. It must, for example, win new and repeat customers. It "has only recently become profitable" and might not be able to sustain profitability and its current revenue-growth rate. And of course, whether and how covid will affect its business is uncertain.

The bookrunners for the offering are Morgan Stanley, Goldman Sachs and Barclays. Poshmark says it will use the proceeds from the offering for working capital and general purposes.