Initial public offerings or IPOs are known as a great way for investors to make a big profit in a relatively short time. On average, they can bring investors 40% returns in the first 3 months. Once the initial funding stages are out of the way, IPOs can be a great way for companies to sell their shares on the open market and raise more capital to continue their growth. Whether or not you’ve used the online marketplace that has gained a cult following, you may have wondered, “is Poshmark publicly traded?” Read on to find out about Poshmark stock IPO and all the important information about Poshmark IPO 2021.
The Poshmark IPO is an interesting case to look at. Poshmark is an online social marketplace where users can sell clothes, shoes, accessories, and beauty and home products. The company was founded by Manish Chandra in 2011 with headquarters in Redwood City, CA, and operates in the US, Canada, India, and Australia.
The platform caters mainly to millennials and Gen Z, especially women. It includes both new and secondhand products and positions itself as a “social marketplace.” Poshmark uses features like “likes” and “comments” to promote engagement, and in 2019 reached over 50 million daily interactions every day, according to the company.
The platform has over 30 million active users and 7 million buyers out of its total community of over 80 million registered users. Poshmark gets its revenue from its fees on items sold, $2.95 for items sold for under $15 and 20% on items that are sold for more.
In November 2017, Poshmark had a funding round that raised $87.5 million, which gave the company a valuation of $600 million.
In 2018, founder and CEO Manish Chadra said in an interview with Reuters that the 4 million sellers on the platform had earned $1 billion from sales of clothing and accessories. It was reported, however, that most of these sales were concentrated in a small group of sellers making five, six and seven figures.
In 2019, the company had over $200 million in revenue and achieved profitability in the second quarter of 2020. Clearly, the pandemic added to the interest in online shopping, and Poshmark used the situation well. The year was good for Poshmark, and total revenue was 16% higher than the previous year. Perhaps that’s when the management started asking themselves, “when is Poshmark going public?” The Poshmark IPO date was not far away.
Read on to find out about Poshmark IPO date and price and other key info.
Poshmark Public Listing Key Data and IPO Date
Poshmark IPO Date: January 14, 2021
IPO stock price: $42
Valuation at IPO: $3 billion
Market cap (5/25/22): $872.6 million
CEO: Manish Chadra
Category: Retail Stocks
Listing method: traditional IPO
Poshmark launched its IPO on Nasdaq and began trading on Thursday, January 14, 2021 with the stock symbol POSH. The company went public with a valuation of $3 billion and offered 6.6 million shares. The listing was backed by Morgan Stanley, Goldman Sachs, and Barclays.
The company had initially priced the stock between $35 and $39, eventually raising the price to $42, but it opened even higher at $97.50, closing at $101 on the first day. Thus, the company raised $277 million. Unfortunately, the following day the stock price fell and keeps falling to this day. About 16 months after the launch, the stock trades at 10% of the price on their IPO date. The company’s valuation rose to over $7 billion at the time of the IPO, but now the company’s market cap is well below $1 billion, $728 million as of May 12, 2022.
The Poshmark IPO price of $97.50 momentarily gave the founder Manish Chandra, who owned a 9.2% stake in the company, a net worth of almost $600 million. The current figure is closer to $1.5 million.
Poshmark launched a traditional IPO instead of merging with a special purpose acquisition company (SPAC). SPACs are black-check companies created for the purpose of merging with a company and helping it go public. This makes the IPO process cheaper and easier but has its downsides like giving up too much equity. Many companies used this method in 2020-2021 to speed up the IPO process, but a lot of them didn’t do too well.
So What About Investing Now?
The Poshmark IPO was far from a success, the stock opened high and closed even higher on the first day, but it was all downhill from the second day until now.
When there is fear and uncertainty on the market, investors tend to avoid growth stocks and IPOs, which are seen as opportunities to win big in a relatively short period. Unfortunately, this can be said of IPOs in general, including Poshmark.
The company itself is not bad and is showing decent financial results, but their marketing model is ineffective and expensive. A forecast from Cowen & Company expects online sales of secondhand goods to grow from $7 billion in 2019 to $37 billion in 2025. And, despite good revenue growth, it doesn’t seem like Poshmark is trying hard enough to catch up with the competition, and there is a lot of competition.
ThredUp, Farfetch, and RealReal are all in the same market of secondhand items, and then of course major players like Amazon, eBay, and Etsy will be chipping away at whatever market share Poshmark hopes to attain. However, we’ll have to see.
If the company continues to innovate and add fun, engaging social features, they might keep their niche and continue to grow. Lots of fashion businesses do well because they’re relatively small and cater to a specific niche. Let’s hope this is a strength and not a weakness for Poshmark. The current stock price may be actually a great time to buy if you think there is something special about this company that will bring it success.
Check out our IPO section to look at other scheduled IPOs. If you want to find companies that match your interests, investment goals and portfolio, try Gainy for some great IPO investment ideas, as well as established blue-chip companies and a variety of other assets.
When is the Poshmark IPO date?
The Poshmark stock IPO date was January 14, 2021, when the US-based social marketplace began trading on Nasdaq.
Is Poshmark a public company?
Yes, when a company launches an IPO (or initial public offering) this means they become a public company whose shares are traded openly on one or more stock exchanges.