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Poshmark Inc. POSH, +1.91% is poised to benefit from a number of consumer trends including a shift to e-commerce, the growth of online shopping with social-media elements, and consumers who are using their time at home during COVID-19 to clean their closets.
“We believe the pandemic has accelerated resale due to: 1) heightened focus on value — it’s the rebirth of off-price; 2) home organization and suburban sprawl, driving a robust inventory pipeline; 3) increased online shopping/changing retail landscape, with thrift stores shrinking, and 4) growing importance of sustainability (and ESG investment assets),” wrote MKM Partners in a note.
MKM initiated Poshmark stock at buy with an $88 price target.
MKM, like other analyst groups, highlight Poshmark’s business model; the company is “asset light” and owns no inventory.
See: Poshmark takes inspiration from old-school retail to create an experience for the future
Cowen analysts note that Poshmark has more than 30 million active users who spend about 27 minutes per day on the app.
“Cowen believes that Poshmark’s intersection between re-commerce, social media, and digital marketplace business models underpins the platform’s high engagement, community, and convenience factors that collectively drive a compelling competitive advantage,” analysts led by Oliver Chen wrote.
Moreover, there’s opportunity for a surge in growth with global expansion into markets including India and the U.K. this year, and expansion into new categories, including home goods.
Cowen estimates that the resale market in the U.S. is $30 billion to $35 billion, with other competitors including The RealReal Inc. REAL, -0.29% and ThredUp, which has confidentially filed to go public.
Also: Poshmark IPO: 5 things to know about the online marketplace before it goes public
“Notably, 19% of Poshmark users deem 80% to 100% of their closet available for resale – evidence that certain customers have fully embraced a circular closet mentality,” Cowen wrote.
“This compares to zero RealReal customers deeming 80%+ of their closet available given the luxury-specific angle. Cowen believes this higher percentage of closet reinforces Poshmark’s larger addressable market via broader category mix and focus on mass merchandise versus narrower categories or price points.”
Cowen rates Poshmark stock outperform with an $88 price target.
Raymond James also rates Poshmark stock outperform with an $83 price target.
“We believe Poshmark’s vast social features create a highly engaging user experience, and in turn drives strong network effects,” wrote analysts led by Aaron Kessler.
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“The high engagement on the marketplace attracts new sellers, who in turn increase the breadth and depth on the marketplace, which in turn attracts more buyers.”
Stifel rates Poshmark stock hold with a $65 price target. Analysts say they have a “favorable view of the company,” but think the stock is trading at a “meaningful premium to the peer group.”
Poshmark was trading at about $70 on Monday with shares up 1.2%. The stock more than doubled when it made its January debut, after pricing at $42 per share.
