Poshmark (NASDAQ:POSH) just acquired Suede One, an authentication service for sneakers, signaling an interest in going after sneakerheads and the sneaker resale market.
In this episode of Upgrade or Topgrade recorded on Nov. 12, Millonacres editor Deidre Woollard and Fool contributors Jeremy Bowman and Nick Rossolillo discuss that acquisition and Poshmark’s recent stock market performance.
Deidre Woollard: Let’s switch and talk about Poshmark. I think Poshmark is fascinating because it’s the one that is the closest to a social network. I’ve talked about Poshmark before on Backstage and one of the things I really like about it is that social stickiness, the identity of being a Posher, this idea of it really being a lifestyle. People love to go to the thrift stores and find their treasures. People are very particular about not telling people which thrift stores they go to because if they find a great one where there’s good designer clothes that they can resell on Poshmark, that it’s like a secret treasure trove. There’s that quality to Poshmark. The stock has not done that well. It’s down around 80 percent since the IPO year-to-date, it’s down around 83 percent. It’s interesting to me because they’ve got a lot of buyers, they’re trailing active buyers, 7.3 million in third quarter of 2021, net revenue was 79.7 million, up 16 percent year-over-year. But the market does not like this stock at all, even though it sits, I would say, between The RealReal and something like thredUP in terms of it being not the cheapest stuff, a little more focused on designer, but not as much focus on the super high-end.
Jeremy Bowman: Yeah, it’s more of a mid-market option. I think, maybe like you said too, it seems like it’s the closest to this direct thrift store, a second-hand store that you can find. I think Poshmark’s pretty cool to shop on there’s a pretty wide range of stuff. I actually got a pair of basketball shoes for seven dollars once. I don’t know who made money off that like we said before. But yeah, I think as a customer-facing platform, they have a pretty wide product range, which is good.
Deidre Woollard: You mentioned basketball shoes. That’s one thing that they announced in their earnings as they acquired this company called Suede One which will virtually authenticate sneakers. I’d like this move for them because I do think that the whole sneakerhead culture, it’s huge. There’s definitely a need for that. It gives Poshmark a little more reason and incentive for sneakerheads to go on the site. They are already a very social community anyway, people that are interested in shoes are very interested in talking to each other. I think that’s a factor as well.
Nicholas Rossolillo: Yeah. I think that is an interesting acquisition on their end. I could see it working out really well. I could see good synergy between those two companies. You mentioned…