Fashion resale platform Poshmark is plotting an initial public offering after raking in its first profits this year.
The nine-year-old startup said it’s benefitted from the coronavirus-fueled boom in online shopping that’s helped its 4.5 million active sellers supplement their income by selling clothes out of their own closets.
Poshmark runs an online marketplace where its roughly 32 million active users can browse and buy clothes and accessories from others on the platform. The company takes a 20 percent cut of each sale worth at least $15 and charges a flat $2.95 fee for sales below that threshold.
The business has grown significantly in recent years — Poshmark handled more than $1.1 billion worth of transactions last year, up from $491 million in 2017 and accounting for about a quarter of the $4 billion generated since 2011, according to its Thursday IPO prospectus.
The California-based company achieved profitability for the first time in the second quarter of this year and also ended the July-to-September quarter in the black, helping it swing to a nearly $21 million net profit in the first nine months of 2020 from a roughly $34 million loss in the same period last year, the filing shows.
“Our community provides both the supply and the demand on our social marketplace, which is critical to our success,” Poshmark said in the prospectus. “We are therefore focused on expanding the community and fostering the best environment possible for a seamless and enjoyable shopping experience.”
But Poshmark acknowledged that it could still take a hit from the COVID-19 crisis, which has weakened demand for fashion products despite accelerating the shift toward online shopping.
“Responses to the COVID-19 pandemic such as prolonged work-from-home policies, quarantines, closures, and travel restrictions could continue to depress demand for the products sold on our platform,” the prospectus says.
Poshmark’s planned debut on the Nasdaq — where it wants to trade under the ticker symbol “POSH” — would follow a string of massive tech IPOs this year.
The company’s prospectus came a week after food-delivery firm DoorDash and vacation-rental giant Airbnb raised billions of dollars in highly anticipated market debuts that sent their stock prices soaring.