Social commerce marketplace Poshmark Inc (Nasdaq: POSH) has agreed to be acquired by South Korean e-commerce firm Naver in a $1.20 billion all-cash deal. According to both parties, the deal is a win-win situation as it will enable Naver to attain further in-roads in online retail, while facilitating Poshmark to access global markets. Following the takeover news, the stock of Poshmark ended Tuesday’s trading session at $17.61, up $2.04 or 13.10% from its prior close.
A media release reveals that Naver, which is also referred to as “Google of South Korea,” is paying $17.90 per share for Redwood City, California-based Poshmark. The deal is expected to be completed in the first quarter of 2023. The deal has received approval from the board of both companies. Following the acquisition, Poshmark would function as a standalone subsidiary of Naver and continue to be headed by founder and CEO Manish Chandra.
Naver runs an e-commerce site and search engine in South Korea. Likewise, Poshmark is a well-known online retail platform that allows people to purchase and sell new and pre-owned apparel, household products, and gadgets. Poshmark boasts of having a community of 80 million registered users in the US.
Poshmark, which is roughly a combo of Instagram and eBay business models, became a noted entity after it became a publicly listed company in January 2021 at $42 per share. The listing happened when online sales skyrocketed due to the outbreak of the COVID-19 pandemic and investors were swarming toward stocks of tech firms. Since that day, the stock has declined substantially, along with the rest of the equities in the technology sector.
Both firms stated that they anticipate the deal to offer considerable revenue and cost synergies. This includes boosting yearly revenue growth by over 20% within a short span of time as advertisements enhance monetization, investments rise, and real-time transactions attain records of higher acceptance.
The agreement signals yet another step in the ongoing consolidation of the secondhand clothing industry. In 2021, Poshmark’s rival Depop, an app facilitating the resale of fashion goods, was purchased by Etsy for $1.62 billion. Another main competitor in this sector is ThredUp.
The takeover news is expected to keep the stock price of Poshmark bullish in the short term.
The historical price chart indicates that the stock of Poshmark has closed above its 50-day moving average after forming a solid base at 10. The next major resistance is only anticipated near 20 levels. The Chaikin Money Flow Indicator is also showing a positive reading. Therefore, we anticipate the stock to remain in an uptrend in the short term.
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