Poshmark (POSH) - Get Poshmark, Inc. Class A Report shares plunged lower Wednesday after the online apparel resale platform posted a wider-than-expected third quarter loss and warned the recent privacy changes from Apple (AAPL) - Get Apple Inc. Report would trigger higher marketing spend.
Poshmark said its loss for the three months ending in September was pegged at 9 cents per share, 2 cents wider than the Street consensus forecast, as revenues came in 3 million light of analysts' forecasts at $82.7 million.
Poshmark added that Apple's new privacy rules, which prevent sending targeted ads to customers without their consent, will both increase marketing costs and slow sales growth in the months ahead. Poshmark said its sees fourth quarter revenues of between $80 and $82 million, well shy of the Refinitiv forecast of $85.2 million.
The Apple privacy warning echoes similar concerns expressed by messaging app maker Snap Inc. (SNAP) - Get Snap, Inc. Class A Report and social media giant Facebook (FB) - Get Meta Platforms Inc. Class A Report, which said later last month that the privacy rules hit social media ad sales creating "significant uncertainty" for the group's main business.
"For the remainder of the year, we expect marketing as a percentage of revenues to be in the high 40s due to higher cost in digital advertising as a result of Apple privacy changes," interim CFO Kapil Agrawal told investors on a conference call late Tuesday. "We expect that uncertainty due to COVID and its effect on reopening time lines across international markets launched in 2021 will result in a slower ramp-up than what we had initially expected for next year, impacting growth rates."
Poshmark shares were marked 28.7% lower in early trading Wednesday to change hands at $17.35 each. Shares in the group traded as high as $105 shortly after they listed on the Nasdaq in early January.