Shares in online fashion reseller Poshmark soared in their trading debut Thursday as investors showed a healthy appetite for secondhand merchandise.
The Poshmark pop continued a spectacular run for IPOs, with the stock jumping more than 140% to $101.50. The offering on Wednesday valued the company, which has 70 million registered users across the United States and Canada, at around $7.5 billion and raised $277.2 million.
“Online marketplaces for secondhand goods have grown in popularity among consumers in recent years, with a number of players looking to gain share, including luxury consignment site TheRealReal, sneaker reseller StockX, and virtual thrift store ThredUp,” CNBC reported.
Poshmark provides an e-commerce marketplace for used clothing, shoes, and accessories, collecting a 20% fee for sales of at least $15 and $2.95 for sales lower than that price. In the IPO prospectus, it said it has benefited from a flood of demand due to the coronavirus pandemic as locked-down shoppers turned to online retailers for essential and nonessential goods.
The company’s revenue increased 28% to $192.8 million in the first three quarters of 2020 and it turned a profit of $20.9 million after losing $33.9 million a year ago.
Poshmark CEO Manish Chandra told CNBC the company is trying to differentiate itself from others in the online resale space by focusing on “social commerce,” where buyers and sellers can chat casually about items on the site.
It had 4.5 million active sellers as of Sept. 30, offering more than 201 million secondhand and new items to 6.2 million active buyers.
“Poshmark has become not just an e-commerce site, but also a community where you can build a style graph and find inspirations. There’s a lot of sharing and community building that’s unique to Poshmark,” Hans Tung, a partner at GGV Capital and early investor in Poshmark, told Reuters.
Chandra doesn’t see shoppers returning to brick-and-mortar stores in the post-pandemic future as a threat to Poshmark. “We see people actually going to events, going to offices, actually participating in the world as an accelerant, because 45% of the items we sell are apparel,” he said.