Poshmark to Sell Itself for Less Than Half Its IPO Price to Korea’s Naver

 

Poshmark to Sell Itself for Less Than Half Its IPO Price to Korea’s Naver

Poshmark Inc. POSH -0.64% has decided to sell itself as part of a deal that values the social shopping platform at less than half of what it was valued at when it went public in early 2021.

According to the businesses, Naver Corp. 035420 -8.79% of South Korea would acquire Poshmark for $17.90 per share in cash. In January 2021, Poshmark set the pricing of its first public offering at $42 per share, and the shares more than quadrupled that day. Since then, the stock has plummeted and ended on Monday at $15.57.

According to Naver, the deal values Poshmark at roughly $1.6 billion, which includes about $580 million in cash reserves. According to FactSet, Poshmark's market value peaked at $7.3 billion on the day company went public.

Poshmark resembles Instagram in appearance and functionality, encouraging sellers to provide and receive "likes" and comments, and allowing consumers to follow their favorite sellers. Similar to eBay Inc., EBAY 1.11% of vendors list their own products directly on the site after taking images of them. Poshmark doesn't keep any goods; instead, it takes fees from sales made on its marketplace.

Online sales increased as a result of the Covid-19 outbreak, but Poshmark's losses have increased and its income growth has stalled this year. Revenue decreased slightly to $89.1 million in the June quarter from $90.9 million in the March quarter, and Poshmark predicted that it would fall between $85 million and $87 million in the September quarter.

The largest online site in South Korea, Naver, also serves as a significant local search engine that ranks above Google. Online purchasing and smartphone payments are also available. Naver is a significant publisher of webtoons, or digital comics designed for viewing on online and mobile platforms, and is the company behind the Line messaging software outside of Korea. The Toronto-based storytelling platform Wattpad was purchased by the South Korean business in 2021 for $600 million.

The Poshmark transaction is anticipated to conclude by the first quarter of 2023, according to the businesses. The Redwood City, California-based business will join Naver as a separate U.S. subsidiary. Manish Chandra, the creator and current CEO of Poshmark, and his group will keep running the business.

Poshmark was established in 2011 and claims to have more than 80 million registered members. It has positioned itself as a method to combine social networking with sustainable business. According to the firm, there were around 8 million active buyers—people who had made purchases on the website in the previous 12 months—in the most recent quarter. Etsy Inc., eBay, ThredUp Inc., RealReal Inc., Facebook Marketplace, and other online markets where people can buy and sell used goods are its rivals.

The businesses claimed that the union would aid Poshmark's expansion into Korea and other Asian countries. Customers in the United States, Canada, Australia, and India may presently download Poshmark's app. Naver would also get a stronger presence in the American market as a result.

Naver projects that the agreement will result in savings for the two businesses of about $30 million. Kim Nam-sun, the chief financial officer of Naver, stated in a conference call that this includes advantages from cutting redundant expenses as well as Poshmark's anticipated profits from using Naver's live-commerce solutions and other technology.

After learning of the Poshmark acquisition on Tuesday, Naver's shares decreased by about 9%.

Choi Soo-Yeon, the CEO of Naver, downplayed the stock decline during a news conference in Seoul. She said that the transaction was made at a very affordable price and expressed optimism that Poshmark's so-called customer-to-customer market will continue to expand in the years to come.