Poshmark Inc. POSH -0.64% has agreed to sell itself in a deal that values the social shopping marketplace at less than half the price it was when it went public in early 2021.
South Korean internet giant Naver Corp. 035420 -6.98% will pay $17.90 per share in cash for Poshmark, the companies said. Poshmark priced its IPO at $42 per share in January 2021, and shares have more than doubled on their first day. The stock has since plummeted, closing at $15.57 on Monday.
The transaction values Poshmark at approximately $1.6 billion, including approximately $580 million in cash reserves, Naver said. Poshmark’s market cap was $7.3 billion on the day of the IPO, according to FactSet.
Poshmark looks and behaves much like Instagram, encouraging sellers to give and receive comments and likes, and allowing users to follow their favorite sellers. Similar to eBay Inc., EBAY 1.11% sellers take photos of their own items and sell them directly. Poshmark charges fees for sales on its marketplace, but does not hold inventory.
While the Covid-19 pandemic has given online shopping a boost, Poshmark’s losses have widened and revenue growth has slowed this year. After reaching $90.9 million in revenue for the March quarter, revenue declined to $89.1 million in the June quarter and Poshmark forecast revenue for the September quarter would be between $85 million and $87 million.
Naver is South Korea’s largest web portal and operates locally as a major search engine ahead of Google. It also offers mobile payments and online shopping. Outside of Korea, Naver is behind messaging app Line and is a major operator of webtoons, or digital comics, designed to be read on online and mobile platforms. In 2021, South Korean company acquired Toronto-based storytelling platform Wattpad for $600 million.
The companies said the Poshmark transaction is expected to close by the first quarter of 2023. Based in Redwood City, California, the company will become an independent US subsidiary of Naver. Poshmark Founder and Chief Executive Manish Chandra and his team will continue to lead the company.
Founded in 2011, Poshmark billed itself as a way to connect sustainable commerce to social media and says it has more than 80 million registered users. The number of active shoppers — people who made a purchase on the site in the past 12 months — was about 8 million last quarter, the company reported. It competes with Etsy Inc., eBay, ThredUp Inc., RealReal Inc., Facebook Marketplace and other marketplaces where people can buy or sell used goods.
The companies said the merger would help Poshmark expand into Korea and other parts of Asia. Poshmark currently offers its app to users in the US, Canada, Australia and India. It would also give Naver a bigger foothold in the US market.
Naver expects the deal to save the two companies a total of approximately $30 million. These include gains from reducing redundant costs and Poshmark’s anticipated gains from access to Naver’s live commerce solutions and other technologies, Kim Nam-sun, Naver’s chief financial officer, said in a conference call.
write to Jiyoung Sohn at [email protected]
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Appeared in the print edition October 4, 2022 as “Poshmark Is Sold To Korean Web Firm”.