How Has Poshmark Performed Since Its IPO?

Poshmark (POSH) hasn't been a stunning performer since its initial public offering (IPO) last year, but the popular social commerce marketplace is growing rapidly. Should investors take a second look at this stock right now? In this segment of Backstage Pass, recorded on Jan. 10, Fool contributors Rachel Warren, Danny Vena, and Jamie Louko discuss. 

Rachel Warren: Poshmark became a publicly traded company just about a year ago, Jan. 14, 2021. Currently has a market cap of around $1.2 billion.

As you can see here, its return has vastly trailed the broader market since its IPO. Not an unusual trend from what we've been seeing with IPO stocks and not unusual for IPO stocks in general, but interesting to note. This just goes back over what I was talking about earlier, founded a decade ago, tens of millions of community members globally in a marketplace for new and pre-owned goods across a range of product categories.

The most recent quarterly report we have for Poshmark was the third quarter of 2021. Interestingly, gross merchandise value reached $442.5 million during the three-month period.

That was up 18% year-over-year, excellent. Another number that stuck out to me as well, management noted that its quarterly gross merchandise value on the platform actually has increased year over year for the past 15 quarters straight.

Over the trailing 12 months, active buyers on the platform reached 7.3 million individuals. That was also up 17% year over year as well. Net revenue saw double-digit year-over-year growth, 16%.

Now, adjusted EBITDA was down. The company also reported a loss from operations on a GAP basis. Whereas in the previous year, in that same quarter, they had been profitable.

The company noted, and this was drawn directly from its third-quarter report, that that amount included primarily stock-based compensation. I think the company is also spending a lot on growing its platform as well as marketing and expanding its whole idea of social commerce. This is something to watch for sure, but also not surprising with a newly public company.

As of the end of the third quarter of 2021, it reported cash, cash equivalents, and marketable securities to the tune of $589 million compared to total current liabilities or liabilities due within the next 12 months of $186 million, so doing really good in terms of liquidity there. I really enjoyed learning about this company. It's not one that I would necessarily invest in just yet. I do think it has a lot of potential.

I really like how it tapping into this unique side of the e-commerce industry, which is an industry I talked about a lot, and how it is really tapping into this idea of e-commerce as a social construct and using that to rejuvenate its platform. Any thoughts, guys?

Danny Vena: It's interesting what you said about Poshmark expanding beyond the used-apparel market. That's what I thought about the stock, is that it was primarily used women's, children's, and in some cases, men's apparel and accessories. I think the reason that I would hold off on buying into it right now, is I'm watching the year-over-year revenue growth. Only about 18% recently.

I know there's been a lot of folks who were gung-ho on e-commerce stocks. Hey, I'm one of them. [laughs] But the fact that folks have basically put down the mouse, walked away from the keyboard temporarily while they go out and live their lives. I want to see if they're able to basically pick that growth back up. Once people got back from vacation, started shopping for the holidays, that kind of thing.

Rachel Warren: Yeah. Absolutely.

Danny Vena: Any thoughts, Jamie?

Jamie Louko: Yeah, I'd really quick just to touch on what you were saying, Danny, I'm loving the fast-growing e-commerce companies. I own plenty of them myself.

When I see that 16% year-over-year growth, it's nice. It's beating inflation by a large amount, but it's just lacking a little bit. When we're seeing those adjusted EBITDA barely breakeven and falling year over year, 2020 was really tough, comparable.

But like Danny said, as people are going out, seeing each other a little more, spending a little less time buying things online. Seeing that slowing growth and lower profitability just concerns me a little bit, but I really do like the company.

Like Danny said, I had no clue that they did things other than apparel, and when you mentioned that Mac Book thing, I was like, wow.

Rachel Warren: [laughs] I know.

Jamie Louko: Maybe I got to go there next time.

Rachel Warren: I'm in the market for a new computer, this might be it.

Jamie Louko: Exactly.

Danny Vena: Well, thank you for that rather in-depth and informative look at Poshmark. Definitely one I will keep a little bit more of an eye on now that I know more about the company.