Poshmark announced last night the pricing of the initial public offering (IPO) of 6,600,000 shares of its Class A common stock was at a price to the public of $42.00 per share. The company previously expected to sell shares at between $35 and $39.
In addition, the underwriters have a 30-day option to buy up to an additional 990,000 shares of Class A common stock from the company at the IPO price, less underwriting discounts and commissions. The closing of the offering is expected to occur on Jan. 19, 2021, subject to satisfaction of customary closing conditions.
The company had raised $153 million prior to going public and was valued at around $500 million at the time of its last funding round in 2017.
Late this morning, the stock began trading under the symbol “POSH” on the NASDAQ exchange and immediately shot up to $104.47, about 147% of its IPO price. This afternoon the stock closed at $101.50 with a market cap of $669.9 million.
While by GMV (General Merchandise Volume) and by market cap the company is much smaller today than eBay or Etsy, it could become a force in some popular categories where it overlaps with the two marketplaces.
What is The Poshmark Marketplace?
Poshmark is a marketplace platform that started with secondhand clothing and accessories products. It now offers products in Home and Beauty & Wellness categories as well. Like eBay and Etsy, all products on the marketplace are sold by individual sellers.
While secondhand clothing and accessories still rule the platform, more new products are available today, especially in the Beauty & Wellness categories where new products are basically a must. Some sellers or “Poshers” as users are called on the marketplace, have thousands of active listings and long sales histories, clearly showing there is a business opportunity on Poshmark.
The biggest difference between Poshmark and marketplace stalwarts of eBay and Etsy is that the marketplace has more integrated social media features, such as Posh Stories and Posh Parties. From the ground up it’s designed to be a fun and social experience which aligns with the lifestyle of younger shoppers, the Gen Z and Millennials generations.
In the social media space, Instagram and Facebook are creating social commerce environments. But by comparison to Postmark, they are well behind in features and usability. The majority of Instagram and Facebook commerce activity still flows through online stores hosted on separate platforms such as Shopify or BigCommerce.
Of course, the other big elephant in the room is Amazon. But Amazon already tried the social commerce route with an Instagram like platform called Spark that lasted just about two years. The company never really explained why it shut down Spark, but Spark was part of the Amazon app that never stood out as a unique service, so many Amazon customers probably didn’t even know it existed.
Sofar, Poshmark has operated only in the US and Canada and with the proceeds from the IPO, the company has suggested further international expansion and adding more categories.
Not an Omni-Channel or Multi-Channel Player
As it stands today, Poshmark is its own unique marketplace that can’t be integrated into third-party commerce solutions which typically would connect a marketplace or platform with integrated listing, marketing and shipping/fulfillment solutions. This may be by design to avoid having big brands infiltrate the marketplace, taking away its more human approach to selling online.
Pretty much the entire listing, sales, shipping, and customer service process on Poshmark is the seller doing the work, not relying on some automated processes. By going public, the company risks that it has to deliver to shareholders if sales growth fell below expectations and that could mean opening up the platform to larger sellers. Just considering the international opportunities, that just doesn’t seem likely anytime soon.
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