Poshmark, Inc. (POSH) is a social marketplace that combines the human connection of a physical shopping experience with the scale, reach, ease, and selection benefits of e-commerce. The Redwood City. Calif.-based company curates its marketplace into lifestyle categories, including apparel, accessories, footwear, home, beauty, and pets.
POSH revenue guidance was in the range of $86 - $88 million and an adjusted EBITDA loss of $7 - $9 million for the first quarter, ending March 31, 2022. The guidance was lower than analysts’ expectations.
The stock has declined 72% in price over the past nine months and 65.5% over the past year to close the last trading session at $13.36. In addition, it is currently trading 74.5% below its 52-week high of $52.39, which it hit on June 3, 2021.
Here is what could influence POSH’s performance in the upcoming months:
Disappointing Financials
POSH’s adjusted EBITDA for its fiscal fourth quarter, ended Dec. 31, 2021, was negative $4.66 million, versus a $4.82 million adjusted EBITDA in the year-ago period. The company’s non-GAAP loss from operations came in at $5.66 million, compared to $4.05 million in operating income in the year-ago period. Also, its non-GAAP free cash flow declined 68.4% year-over-year to $26.67 million.
Low Profitability
In terms of trailing-12-month asset turnover ratio, POSH’s 0.73% is 30.6% lower than the 1.05% industry average. Its 0.58% trailing-12-month Capex/Sales is 77.8% lower than the 2.63% industry average. Furthermore, the stock’s trailing-12-month EBITDA and net income margin are negative compared to the 12.63% and 6.61% respective industry averages.
Stretched Valuations
In terms of forward EV/S, POSH’s 1.25x is higher than the 1.20x industry average. Also, its 2.81x forward P/S is 200.4% higher than the 0.94x industry average.
POWR Ratings Reflect Bleak Prospects
POSH has an overall D rating, which equates to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. POSH has a D grade for Value, which is in sync with its 43.10x forward P/CF , which is 286.1% higher than the 11.16x industry average.
Furthermore, the stock has an F grade for Sentiment, which is consistent with analysts’ expectations that its EPS will remain negative in fiscal 2022 and 2023.
POSH is ranked #52 of 61 stocks in the D-rated Consumer Goods industry. Click here to access POSH’s Growth, Momentum, Stability, and Quality ratings.
Bottom Line
Despite trading below $15, POSH looks overvalued at its current price level. Due to its weak financials and lower than industry profitability, we think it could be wise to avoid POSH now.
How Does Poshmark, Inc. (POSH) Stack Up Against its Peers
POSH has an overall POWR Rating of D, which equates to a Sell rating. Therefore, one might want to consider investing in other Consumer Goods stocks with an A (Strong Buy) or B (Buy) rating, such as Mannatech, Incorporated (MTEX), Société BIC SA (BICEY), and ACCO Brands Corporation (ACCO).
POSH shares were trading at $12.75 per share on Thursday morning, down $0.61 (-4.57%). Year-to-date, POSH has declined -25.13%, versus a -3.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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