Second-hand market experiences high-speed expansion, as demonstrated by Poshmark's IPO
Poshmark, the popular mobile app that allows users to buy and sell second-hand fashion, made a significant move in June 2019 by expanding into the home category. This expansion marked a new chapter for the company, as it aimed to tap into the growing demand for resale goods.
The move seemed to pay off, as Poshmark's revenue for the first nine months of the year reached nearly $193 million, marking a 28% year-over-year increase. This growth was reflected in the company's stock performance, as it shot up over 140% and reached $101.50 by close on Thursday, following the initial public offering (IPO) in which 6.6 million shares were sold.
However, the stock price saw a dip by Friday, falling to $83.20. Despite this, Poshmark outperformed expectations during its first few days on the Nasdaq, trading under the symbol POSH at $42.00 per share.
Poshmark's user base is primarily composed of millennials and Gen Z, with over 70 million registered users across the U.S. and Canada. Last spring, the company introduced the Posh Stories feature, allowing users to create and share shoppable content for their listings, further enhancing the user experience.
The resale market, including Poshmark, is anticipated to reach $44 billion in sales by 2029. This growth is partly driven by the increasing demand to participate in resale as a seller, a trend that has likely been super-charged by the pandemic, according to MKM Partners Managing Director Roxanne Meyer.
Interestingly, more than half of consumers expect to spend more money on secondhand fashion over the next five years, according to a report released last year by ThredUp. This shift towards sustainability and cost-effectiveness could bode well for companies like Poshmark.
While the exact number of active users on Poshmark at the time of the IPO is not specified, it's clear that the company has made significant strides in the resale market. The apparel category has struggled during the pandemic, but secondhand sales may be a strong performer, as consumers continue to seek affordable and sustainable fashion options.
Despite the initial success, it's important to note that Poshmark's stock performance may be subject to market fluctuations and external factors. As such, investors and users should keep a close eye on the company's developments in the coming months and years.
