Poshmark’s IPO stock is in decline and here’s why. Poshmark or POSH as their trading name in NASDAQ has seen their IPO stock in a steady decline since February hitting a new low in March. Poshmark operates in a rootless ever-changing online marketplace that is in a constant battle to gain the most users. Poshmark or POSH as their trading name in NASDAQ has seen their IPO stock in a steady decline since February hitting a new low in March. Poshmark operates in a rootless ever-changing online marketplace that is in a constant battle to gain the most users.
In that competitive market, it’s easy for users to switch selling and buying on a new platform and this is where it leads Poshmark in a vulnerable situation as investors gamble on the winner. Investors will study over e-commerce companies releasing their sale reports to make that bet.
Poshmark’s previous year of 2020 beat analyst projections but Wall Street predicted revenue to fall at $75 million in the first quarter of 2022, investors felt not so confident in POSH, leading to a price drop in their stock.
Initially, Poshmark said it will sell its shares between $35-$39, then selling at $42 per share. It opened in Nasdaq at $97.5 on its first day and closed at $101.5. By day two POSH IPO Stock has been in decline.
Their stock price fell by 55.54% to $45.13 by mid-march. It’s still above the IPO price initially released at $97.5 but investment has fallen much sharper than expected by Poshmark. The market isn’t looking promising for POSH, so investors sold the stock.
What next for Poshmark?
They are a relatively young company and choosing to IPO during an unsettled market badly affected by the global pandemic which has thrown economies around the world into disarray.
Poshmark competes against eBay, Mercari, and Facebook marketplace to name just a few in a long list of brutal competition.
Since 2019 for instance, Facebook Marketplace has had over 800 million monthly users.
Poshmark on the other hand has 31.7 million active users, 6.5 million active buyers, and 4.5 million active sellers which is a healthy number considering Poshmark is only based in America, Canada, and now Australia that has just been launched.
Operating online is an advantage in a time of lockdowns globally as stores are shut, but focusing on high-end fashion goods during a time when millions of people around the world have suffered financial difficulties due to covid in an unpredictable online market which they only have a small percentage of globally, while the worldwide economy faces many economic uncertainties, seems to have gone against POSH as they opened stock this time around, bad timing.
Long-term investors tend to be more conservative and Poshmark may need to prove their business model and its revenues another few years before selling IPOS.
It may be too soon for Poshmark to jump on the Nasdaq and maybe not be a winner just yet in the investor race but POSH is one to look out for in the future. It’s a young horse that has plenty of life in it yet!