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Taking Stock of Poshmark’s Risk Factors
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Taking Stock of Poshmark’s Risk Factors

Poshmark, Inc. (POSH) is a social marketplace for new and second-hand style products, with over 80 million users in the U.S., Canada, and Australia. Recently, Poshmark delivered better-than-expected Q2 fiscal 2021 performance on both revenue and earnings fronts.

Let’s take a look at the company’s latest financials, along with what has changed in its key risk factors that investors should be aware of.

Poshmark’s net revenue in Q2 increased 22% year-over-year to $81.8 million, beating consensus estimates of $80.3 million. Its gross merchandise value (GMV) increased 25% over the previous year to $449.6 million.

Poshmark founder and CEO Manish Chandra remarked, “Our dynamic, flexible, and social marketplace continues to benefit from fast-moving apparel trends. We are uniquely positioned to benefit from today’s seismic shift in fashion, the pent-up demand for purchases across a wider range of apparel and accessories, and increased consumer interest in sustainability.”

Higher cost of revenue, coupled with increased marketing and general and administrative expenses, led to adjusted EBITDA dropping to $6.1 million from $23.7 million a year ago. Net loss per share at $0.04 was narrower than analysts’ estimates of net loss per share of $0.07. (See Poshmark stock charts on TipRanks)

Looking ahead, for Q3, the company estimates revenue to be in the range of $81 million to $83 million. Adjusted EBITDA is expected to land between $1 million and $2 million.

On August 11, Stifel Nicolaus analyst Scott Devitt reiterated a Buy rating on the stock, but decreased his price target to $48 from $50.

Devitt commented, “We continue to view Poshmark as the best-positioned player in the resale eCommerce landscape, with an asset-light and easily extendable business model supporting attractive long-term margins.”

Based on three Buys and two Holds, consensus on the Street is a Moderate Buy for Poshmark. The average Poshmark price target of $46.40 implies 82% potential upside for the stock. Shares are down 75% over the past year.

Risk Factors

According to the new TipRanks Risk Factors tool, Poshmark’s main risk category is Finance & Corporate, accounting for 38% of the total 58 risks identified. Since June, the company has changed one key risk factor under the Macro & Political risk category.

Poshmark highlighted that it has witnessed an impact from the COVID-19 pandemic on its business, and expects this impact to continue.

While a gradual removal of restrictions and vaccine rollout has begun, there still is uncertainty about the pandemic’s impact on the global economy, e-commerce, and the macroeconomic conditions that affect consumer spending behavior.

Additionally, the pandemic preventative measures that are currently in effect, or which may be introduced in the future, may impact the ability of Poshmark’s sellers to deliver products to buyers.

Compared to a sector average Macro & Political risk factor of 14%, Poshmark’s is at 7%.

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