Please ensure Javascript is enabled for purposes of website accessibility

Why Poshmark Stock Is Down Big Today

By John Rosevear – Aug 11, 2021 at 1:39PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings were solid, but the guidance raised some concerns.

What happened

Shares of online apparel-resale platform Poshmark (POSH 0.06%) were trading lower on Wednesday. The company reported its second-quarter results after the U.S. markets closed Tuesday, and while its numbers were good, its guidance was not quite what retail investors had expected.

As of 12:45 p.m. EDT, Poshmark's shares were down about 14.6% from Tuesday's closing price.

So what

Poshmark's second-quarter results were pretty decent, or at least better than Wall Street had expected. The company reported a loss of $0.04 per share on revenue of $81.8 million, a double beat; analysts polled by Thomson Reuters had expected a loss of $0.07 per share on revenue of $80.29 million.

During Poshmark's earnings call, CEO Manish Chandra said that the company's efforts to expand to new markets continue on course, with its new Australian site (launched in February) hitting its stride and preparations for an expansion to India well underway. 

A woman viewing Poshmark's mobile site on an Apple iPhone.

Poshmark's CFO said that Apple's new privacy controls had hampered its marketing in the quarter. Image source: Poshmark.

But there may be clouds on the horizon, and that's probably why the stock is down today. The company's guidance for third-quarter revenue -- between $81 million and $83 million -- fell a bit short of expectations, and outgoing CFO Anan Kashyap said that its mobile marketing efforts were being hampered by Apple's new user controls over tracking by digital advertisers. 

Now what

These may be passing issues. In an interview with Reuters, Chandra said that he expects the effects of Apple's policy to be temporary, as Poshmark has increased its spending on alternative marketing channels including television advertising and celebrity tie-ups. 

Chandra also said that he doesn't expect a significant negative impact from the outbreak of the delta variant of the coronavirus, given the company's strong revenue growth during the initial COVID-19 outbreak early last year. 

John Rosevear owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Poshmark, Inc. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Nearly 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Poshmark, Inc. Stock Quote
Poshmark, Inc.
POSH
$17.83 (0.06%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
349%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.