Poshmark is set to have a new owner halfway across the globe.
Naver, South Korea’s largest internet firm, plans to acquire all of the issued and outstanding shares of Poshmark for $17.90 in cash, in a $1.2 billion deal offering a 15 percent premium to the closing stock price of $15.57 on Monday.
Naver hosts South Korea’s largest number of bloggers. It’s also home to the biggest global share of digital creators via Wattpad and comics through Webtoons. And the firm has the largest and longest-standing online community in Korea, where more than 36 million monthly users access its search portal and online community services. Naver also claims to have the second-biggest metaverse app in the world through Zepeto, where Ralph Lauren made its debut in the growing virtual world last year. Naver’s community also extends to other large, fast-growing and highly engaged groups, including its K-Pop fandom community Weverse, which is jointly owned with the management company of the successful global pop group BTS.
“The combination will create the strongest platform for powering communities and re-fashioning commerce,” Naver CEO Choi Soo-Yeon said. “Poshmark is the definitive brand for fashion in the United States that provides a social network for buying and selling apparel. Naver’s leading technology in search, AI recommendation and e-commerce tools will help power the next phase of Poshmark’s global growth.”
Poshmark offers a “natural fit” since the two share a common set of values and vision centered around content, community and empowerment. The deal would create a socially responsible and sustainable shopping experience “designed around sellers of all sizes and interests” including individuals, influencers and professional sellers to brands and specialty boutiques for a “large, loyal and highly engage social community,” he said.
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“The opportunity to join forces with Naver—one of the world’s leading and most innovative and successful internet companies—is a testament to the strength of our brand, operating model, and what we’ve built over the last decade with our talented team and amazing community,” Poshmark founding CEO Manish Chandra said. “Our industry continues to evolve at a rapid pace, and we are excited to continue to lead the future of shopping by providing our community with an unparalleled experience that is simple, social, fun and sustainable.”
Chandra said Poshmark employees would benefit from being a part of a larger, global organization, while shareholders would see “significant and immediate value.” Naver could be instrumental in helping Poshmark expand in Asia and “enter new and large markets,” he added.
Bay Area-based Poshmark first prepared for an April 2019 initial public offering when it was valued at $1.25 billion. The secondhand apparel marketplace, founded in 2011, delayed its IPO to focus on sales growth. The company filed its prospectus in December 2020, two months after rival ThredUp’s October IPO filing. Poshmark complete its IPO in January 2021 with ThredUp following two months later. The RealReal was the first among U.S. resellers to go public in June 2019 with a luxury-focused offering.
Etsy Inc., an e-commerce firm that focuses on handmade or vintage offerings, was once considered a possible acquirer. It went on to scoop up Poshmark rival U.K. resale marketplace Depop in June last year for $1.63 billion. A few weeks later, it acquired Brazil-based Elo7, a custom and made-to-order merchandise marketplace for $217 million.
Naver pegged the U.S. resale market’s value around $80 billion. It is expected to grow by 20 percent annually to $130 billion by 2025, it said, citing data from Activate Consulting.
Resale is benefitting from growing Gen Z interest. Urban Outfitters in August 2021 launched Nuuly Thrift, a secondhand marketplace that’s a sister site to its millennial and Gen Z-centric rental brand Nuuly Rent. And this past March, Paris-based Vestiaire Collective acquired Los Angeles-based luxury resale player Tradesy.
Though Naver’s offer values Poshmark at less than half of its per-share IPO price of $42, Wedbush Securities’ Tom Nikic said, “We don’t think they’ll get a better deal than this.” Insider shareholders control 77 percent of the voting rights and have already given their approval, he wrote in a research note Tuesday, adding that the “company has struggled mightily since going public in early-2021, consistently missing Street expectations and experiencing decelerating top-line growth.”
In 2021, Poshmark lost $98 million on revenue of $326 million, and generated about $2 billion in gross merchandise value. Its community of over 80 million registered users cover 90 percent of U.S. zip codes.
Poshmark has some advantages that make it attractive to potential acquirers, such as a healthy cash balance, asset-light business model, large user base and social network features. But Nikic said e-commerce has had a tough go of it over the past 12 to 18 months.