Street Initiates Coverage of Poshmark (POSH) With Mixed Ratings

Wall Street firms initiated coverage of recent IPO Poshmark (NASDAQ: POSH) with a bag of mixed ratings Monday.

POSH opened its first day of trading on the Nasdaq on January 14 rising more than 140%. A day earlier, Poshmark priced its IPO at $42 a share to be valued at more than $3 billion. Amid high interest, POSH began trading at $97.50.

However, the stock has been moving lower since making its public debut in January. On Friday, the stock closed at $69.21.

Cowen analyst Oliver Chen, who rates the stock with an “Outperform” rating, says POSH offers exposure to a simple, social, and scalable e-commerce.

“Poshmark has over 30mm active users that spend ~27 minutes per day on the app, underscoring the power of Poshmark's social selling model that leverages elements of both social media and re-commerce. 87% of purchases were preceded by a social interaction in 2019. Simplicity drives engagement as sellers can list and sell items in minutes from their smartphones, while buyers can browse a live feed and select from 380k items listed each day across 9,000+ brands. As a two-sided, peer-to-peer marketplace, POSH has a compelling flywheel model that has yielded 100% net revenue retention among buyers,” the analyst - who has a price target of $88.00 per share - wrote in today’s note.

Similarly, Aaron Kessler at Jefferies initiated the coverage of Poshmark with an Outperform rating and $83.00 price target.

“Our positive fundamental view is based on: 1) a Large TAM that benefits from convergence of eCommerce, Social, and Resale themes; 2) Poshmark is a leader in social commerce with large and highly engaged user base; 3) our expectation of ~20% long-term growth, driven by continued growth of active users and existing cohorts, new product categories, international, and enterprise seller services; and 4) the company’s asset-light model, which should lead to 30-35% long-term EBITDA margins,” Kessler said in a research note.

Unlike Jefferies and Cowen analysts, their colleagues from Stifel, Barclays, and Morgan Stanley initiated coverage with a “Hold” or equivalent rating.

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