Digital market Poshmark (NASDAQ: POSH) presented a strong display on its first day of negotiations on Thursday. The writing was on the wall, as the company originally planned to offer shares in the $ 35 to $ 39 range, but investor enthusiasm for the high-quality second-hand retailer pushed the range even higher on the eve of the IPO. . Ultimately, Poshmark’s shares were quoted at $ 42, but even with this higher tag price, the company appears to have underestimated demand.
Investors cried out for shares before they even started trading, raising the opening price to $ 97.50, 132% higher than the offer price. The shares started trading around 11:42 am EST on Thursday, leaving the gate and never looking back. The stock ended the trading day at $ 101.50, gaining a spectacular 142% on its first trading day.
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The Poshmark website facilitates the purchase and sale of second-hand fashion and luxury items, including clothing, shoes and jewelry. What differentiates the e-commerce market from the competition, however, is the social aspect of the platform. It encourages socialization, helping the online bazaar to promote high engagement and increase sales.
The company reported that in 2019, active users spent an impressive 27 minutes a day browsing, shopping, buying, selling and connecting with other users, resulting in 20.5 billion social interactions.
This strategy seems to be working. In 2019, Poshmark generated revenue of approximately $ 205 million, an increase of 38% year on year, although its net loss worsened 236% to $ 49 million.
The company appears to have reached an inflection point this year, however. During the first nine months of 2020, revenue grew 28% year over year to $ 193 million, and Poshmark was able to make a profit, with a net profit of $ 21 million, compared to a loss of about $ 34 million during the previous year.
Given Poshmark’s solid growth and recent shift to profitability, investors should add this second-hand market to their watch list.