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Korean e-commerce giant Naver Corp (KS:035420) announced Monday after the close that it had agreed to buy out fashion marketplace Poshmark Inc (NASDAQ:POSH) for $17.90 a share. Poshmark shares jumped 11.7% in pre-market trading to $17.39/share. The deal price is about double Poshmark’s 52-week low, though well below its $42 IPO price in January 2021 or its post-deal pop to near $100.
Naver CEO Choi Soo-Yeon stated, “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.”
The deal values Poshmark at a $1.4B market cap, with an enterprise value of roughly $825M, or 3x consensus 2023 estimates.
Per Needham & Company, “The company sees significant revenue and cost synergies ahead; resale stocks have been hit the most in our coverage (basket of TheRealReal Inc (NASDAQ:REAL), ThredUp Inc (NASDAQ:TDUP), and POSH is down 60%+ YTD) — we view the transaction as bullish for the space and question if this creates M&A optionality for other unprofitable platforms.” Needham also notes that REAL has been operating on an interim co-CEO basis since its founder stepped down in June, making it potentially “a target of a larger retailer/brand looking to enter resale space (authentication automation is arguably an advantage).”
ThredUp is trading 3.9% higher in the pre-market, while TheRealReal is up 4.9%. Naver closed down 8.7% on the Korean Stock Exchange, as Citi downgraded the stock to sell and JPMorgan lowered its price target on Naver while maintaining a neutral rating.
