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Rafael Henrique | LightRocket | Getty Images
Online clothing retailer Poshmark filed its IPO prospectus on Thursday, after racking up more than $ 30 million in profits in the past two quarters.
Poshmark, founded in 2011, is an Internet marketplace for used clothing, footwear and accessories. Like eBay, Poshmark connects buyers with sellers, who often list items from their own closet. The business earns money by taking a share of each transaction.
Poshmark’s filing is coming in investor towers after DoorDash and Airbnb IPOs last week, which are also market-based companies, resulted in huge day one pops, potentially indicating the public market’s appetite for the business model. Discount online retailer Wish followed suit with its IPO this week, even though its stock price fell out of the gate.
Poshmark’s revenue rose 28% in the first three quarters of 2020 to $ 192.8 million, from $ 150.5 million in the same period last year. It has gone up to a profit of $ 20.9 million over that period, after losing $ 33.9 million a year ago.
Gross merchandise volume, a key metric measuring the total dollar value of merchandise sold online, was negatively impacted in the first quarter due to the coronavirus pandemic. It only rose 9% in the first three months of the year, but rebounded to reach 42% growth in the second quarter as activity by buyers and sellers picked up. The company also cited its growing base of active buyers, which doubled in June compared to two years ago.
Like many online retailers, Poshmark said it had benefited from a surge of demand generated by the coronavirus, as local governments ordered people to stay indoors and stores closed. The market has also served as a source of additional income for Poshmark’s 4.5 million sellers, the company added.
However, Poshmark said Covid-19 remains a risk due to the economic impact on consumers and uncertainty over the stability of the economy as a whole.
“Responses to the COVID-19 pandemic such as extended work-from-home policies, quarantines, closures and travel restrictions could continue to depress demand for products sold on our platform,” said the company in the prospectus.
The filing provides the first snapshot of Poshmark’s financial data after the company confidentially filed for its IPO in September. It plans to list on the Nasdaq under the symbol “POSH”.
Poshmark said it now has 6.2 million active buyers and 31.7 million active users, the majority of whom are women and are either millennials or Gen Z. It lists Amazon, eBay, Etsy, Facebook, Shopify, TJ Maxx, and Walmart among its competitors.
Morgan Stanley and Goldman Sachs lead the offer.
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