Poshmark Inc., the online marketplace for secondhand goods, will start trading Thursday, the latest e-commerce site to tap the buoyant initial public offering market as the coronavirus pandemic continues to squeeze bricks-and-mortar stores.
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Poshmark said it priced its IPO at $42 a share, giving the company an initial valuation of more than $3 billion. The shares priced above the target range of $35 to $39. The business was valued at $1.25 billion in 2019. Poshmark declined to comment, citing a regulatory quiet period ahead of its IPO.
A number of digital marketplaces, including Poshmark, reported more people selling goods in spring 2020 as a way to generate extra income and stave off boredom during widespread lockdowns. Poshmark sellers list everything from $17 reusable Starbucks cups to $3,000 Louis Vuitton handbags. While many traditional apparel companies struggled to survive, Poshmark was profitable for the first time in its 10-year history in the quarter ended June 30.
The company, based in Redwood City, Calif., follows ContextLogic Inc., the parent of e-commerce marketplace Wish, which has traded below its IPO price of $24 after a rocky debut last month. The investor skepticism is an anomaly in an otherwise booming IPO market that has seen sky-high valuations and large gains from tech companies including Airbnb Inc. and DoorDash Inc.
ThredUP Inc., an online thrift store and Poshmark competitor, filed confidentially to go public in October, while luxury retailer Mytheresa Group set plans this week to debut at a valuation of roughly $1.6 billion. All of these companies follow online consignment company The RealReal Inc., which went public in 2019 and now sports a market value of about $2.3 billion.
While The RealReal focuses exclusively on high-end goods, Poshmark sellers can list goods that retail at a range of price points, as well as handmade items. Like RealReal and sneaker marketplace StockX LLC, Poshmark has also instituted an authentication process for luxury goods. Poshmark limits authentication to items valued at $500 or more.
The RealReal and thredUP are online consignment services, while Poshmark is a marketplace more akin to eBay Inc., which allows sellers to list, sell and ship their merchandise directly to buyers. Poshmark collects a flat 20% fee for sales $15 and over and $2.95 for sales under that price. The company is able to keep its costs down by not purchasing inventory.
Poshmark calls itself a “social marketplace” and attributes its success to keeping shoppers engaged by cultivating an experience that feels more like browsing Instagram than a traditional retail site. The company said its 31.7 million active users spent roughly 27 minutes a day on its platform in 2019, according to the Securities and Exchange Commission filing. Poshmark defines an active user as anyone who has visited the marketplace in the previous 12 months.
The company generated revenue of $192.8 million in the nine months ended Sept 30, up 28% from the previous year, according to its IPO filing.
Secondhand retail has gained relevance in the broader apparel sector in recent years as younger consumers gravitate toward resale to quickly refresh their closets with trendy and coveted pieces without breaking the bank.
The total resale market was $28 billion in 2019 and is expected to increase to $64 billion by 2024, according to research from GlobalData commissioned by thredUP. The same report projected that the online secondhand market would expand in 2020, even as the broader retail sector shrank.
The $42 price for Poshmark’s IPO, which is being managed by a group of eight banks led by Morgan Stanley, Goldman Sachs and Barclays, would allow the company to raise more than $277 million. The company will be listed on the Nasdaq Stock Market under the symbol “POSH.”
Write to Charity L. Scott at Charity.Scott@wsj.com