Rafael Henrique | LightRocket | Getty Images
Shares Poshmark and ThredUp, two leaders in the secondhand retail space, tumbled Wednesday in extended trading, as widening losses overshadowed strong sales growth in a hot category — especially among Gen Z.
Poshmark’s stock was falling more than 11%, and ThredUp shares were recently down about 8%.
The stock drop marred ThredUp’s first quarterly report as a public company. It debuted in March, while Poshmark shares have been public since mid-January.
ThredUp shares as of Wednesday had risen more than 42% since its IPO, bringing the company’s market cap to $1.9 billion. Poshmark shares have fallen more than 55% since it went public, giving it a market value of $3.3 billion.
Both businesses are digital marketplaces for secondhand clothes, shoes and accessories, somewhat akin to eBay and Etsy. Younger consumers in particular have been leading a shift to places like Poshmark, ThredUp, Depop, The RealReal and StockX — with some favoring these stores for the bargain prices, while others see shopping there as a way to be more conscious about the environment. These businesses have also allowed many consumers to clean out their closets during the Covid pandemic and come up with extra cash.
The increasing interest in shopping secondhand has whet investors’ appetite to buy into a space that has seen momentum. But the losses sparked a sell-off on Wednesday.
Here’s how both Poshmark and ThredUp did during the first quarter.
Poshmark’s net loss for the period ended March 31 widened to $74.5 million, or $1.19 per share, from a loss of $11 million, or 89 cents a share, a year earlier. Excluding one-time charges, it lost 33 cents per share, less than the 42-cent loss that analysts polled by Refinitiv were anticipating.
Revenue rose 42% to $81 million from $57.1 million a year earlier, topping analyst estimates for $77.2 million.
Poshmark said it expects second-quarter revenue in the range of $79 million to $81 million. Analysts had been looking for revenue of $79.3 million, according to Refinitiv data. It’s calling for adjusted EBITDA of between $1.5 million and $2.5 million.
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“There’s a real meaningful shift as people are preparing for reopening,” said Manish Chandra, founder and CEO, in a phone interview. “So, we’re pretty optimistic that as people go out, go out on dates, go on trips, go to weddings — the demand for apparel, both on the demand side and on the supply side, is accelerating.”
Chandra said searches for “crop tops” doubled in March from a year ago. Searches for “jean shorts” were up 85%, he said, as people visited Poshmark to buy clothes for socializing again.
During the first quarter, the number of active buyers on the site rose 18% from last year to 6.7 million. An active buyer is a unique user who has purchased at least one item from Poshmark in the trailing 12 months, regardless of returns and cancellations.
Poshmark continues to innovate and expand to new categories and regions. In the first quarter, it launched a pets category and expanded its business into Australia, marking its second venture overseas. It also started allowing users to sell and market their merchandise through short video clips in addition to still photos.
thredUP Co-Founder & CEO James Reinhart speaks onstage during TechCrunch Disrupt San Francisco 2019 at Moscone Convention Center on October 02, 2019 in San Francisco, California.
Kimberly White | Getty Images Entertainment | Getty Images
ThredUp is investing new warehouses and automation to meet the demand it is seeing from customers and speed up deliveries. But that has pressured profits.
ThredUp’s net loss in the period ended March 31 widened to $16.17 million, or 86 cents per share, from $13.2 million, or $1.23 per share, a year earlier. Excluding one-time items, it lost 17 cents per share.
Its revenue rose 15.2% to $55.7 million from $48.3 million a year earlier. That beat estimates for $48.4 million.
The company said its active buyer count grew 14% year over year to 1.29 million, and orders were up 18% at 1.13 million.
“We continue to be optimistic about resale’s long-term growth, and are seeing early signals of an uptick in purchasing enthusiasm as the U.S. economy reopens,” CEO and co-founder James Reinhart said in a statement.
ThredUp is calling for second-quarter revenue to be in a range of $53 million to $55 million. Its full-year outlook for sales is a range of $223 million to $229 million.
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