What Led to Poshmark Inc (NASDAQ: POSH) Stock Crash?

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Poshmark Inc (NASDAQ: POSH) stock fell over 18.2% on 12th March, 2021 (as of 10:32:38 UTC-5 ; Source: Google finance) after the company’s income from operations rose to $1.6 million in the fourth quarter of 2020, compared to a loss of ($15.1) million in the fourth quarter of 2019.

Poshmark has benefited from a growing interest in secondhand online shopping, as the economic fallout of the pandemic that ravaged businesses and led to massive job and pay cuts made people more cautious about their spending. The company said that its strong demand continued into January, but February sales shrank in certain states due to a severe winter storm that engulfed Texas and nearby states. It also blamed the pandemic for causing delays in delivery of certain orders. However, Poshmark expects its sales to bounce back as more people venture out and look for new styles for summer.

Moreover, for the fourth quarter of 2020, the company reported GMV pf $387.2 million, which represents an increase of 28% year-over-year from $302.1 million in the fourth quarter of 2019. Adjusted EBITDA for the fourth quarter of 2020 was $4.2 million which increased from a loss of ($12.6) million in the fourth quarter of 2019. Adjusted EBITDA margin was 6.1% in the fourth quarter of 2020. Cash, cash equivalents, and marketable securities were $262.1 million at the end of December, 2020. During the third quarter, the company had issued a $50.0 million three-year convertible note which converted into 1.4 million shares of Class A Common Stock upon completion of the IPO on January 14, 2021.

POSH in the fourth quarter of FY 20 has reported the adjusted earnings per share of 5 cents, beating the analysts’ estimates for the adjusted loss per share of 1 cents, according to analysts polled by Capital IQ. The company had reported the adjusted revenue growth of 27 percent to $69.3 million in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $69.2 million.

The company also is projecting Q1 revenue to be in a range of $75.5 million to $77.5 million, while the Street is expecting to be $80.1 million for the March quarter.

Meanwhile, during fiscal 2020, the company had launched two new categories, Beauty & Wellness and Toys & Games. The company has completed the rollout of “Posh Stories,” the first video feature to enable sellers to showcase and sell their listings with short videos and photos.

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