Poshmark is pushing into the public market at a high-end valuation as the resale market sizzles

Poshmark, the nine-year-old, Redwood City Ca.-based online marketplace for second-hand clothing, beauty, and home decor products, is set to start trading as a public company on the Nasdaq tomorrow after pricing 6.6 million shares higher than originally planned, according to Bloomberg.

Per its report, the company, which originally planned to sell shares at between $35 and $39 million, saw enough demand to rationalize a $42-per-share price — one that values the company at $3.5 billion on a fully diluted basis.

Given investors’ feverish embrace of all kinds of newly public consumer brands, including Airbnb, DoorDash and, to a more moderate degree, Wish (trading currently where it opened when it hit the market in mid-December), most anticipate smooth sailing for the company as it makes the move from private to publicly traded company.

What it has going for it: More than 70 million Poshmark users having sold more than 130 million items through the platform since its inception, according to the company.

Its numbers are moving in the right direction. Poshmark makes money off commissions on peer-to-peer sales and on products that it sells sold via wholesale and the company turned profitable last year for the first time Specifically, according to its S-1, it produced net income of $21 million off revenue of $193 million during the nine months ended September 30, 2020, compared with a net loss of $34 million on revenue of $150 million during the same period in 2019.

Also, unlike many brick-and-mortar retail businesses to be hard hit by pandemic-related shutdowns  — J. Crew, Neiman Marcus, and Brooks Brothers are just a few in a line of companies that have declared bankruptcy — Poshmark only facilitates transactions between buyers and sellers so it doesn’t have the burden or expense of holding inventory.

More, resale platforms have the wind at their back right now. Shoppers are more interested than ever in sustainability, and buying someone else’s never- or lightly-used items is more environmentally friendly than supporting, say, a fast fashion brand. (Forever 21, the fast-fashion mall staple, filed for bankruptcy in 2019.)

What Poshmark is going up against: making public market investors understand how it differs from already publicly traded rivals like The RealReal, which went public in 2019 and whose current market cap is roughly $2.3 billion, as well as other newer entrants. For example, another company set to go public (unless it gets SPAC’d) is ThredUp, which filed a confidential registration statement with the SEC for an IPO last fall around the same time that Poshmark did this. Unlike The RealReal, which is focused exclusively on high-end luxury goods that it authenticates, Poshmark and ThredUp make accessible a wider range of more affordable items and compete more directly.

Further, while investors are excited about the many companies that are finally beginning to trade publicly, companies like Poshmark are competing for mindshare with other newer entrants.

Among these is the lending company Affirm. Its shares began trading earlier today.