By Noor Zainab Hussain and Melissa Fares
(Reuters) - Shares of Poshmark Inc soared more than 140% in their stock market debut on Thursday, valuing the online fashion marketplace over $7 billion, highlighting investor optimism for online shopping that has surged during the COVID-19 pandemic.
Shares opened at $97.5 on the Nasdaq and finished the first day trading at $101.5, well above the initial public offering (IPO) price of $42 apiece. The company raised $277.2 million in its IPO on Wednesday.
"Our business... was put to a severe test in the last 12 months, and it's really come out as thriving," founder and CEO Manish Chandra told Reuters.
"The trends that we've focused on for a long time have been accelerating... So we felt like it was the right time to introduce Poshmark to the world of public investors."
As virus-wary shoppers opt to stay home to curb the spread of COVID-19 and instead place orders online, several retailers including Walmart (NYSE:WMT) and Target (NYSE:TGT) have clocked record e-commerce sales.
Founded in 2011, Poshmark is an online marketplace for individuals to sell clothes and accessories ranging from pre-owned T-shirts to high-end boutique dresses, allowing shoppers to bid on the merchandise. It charges sellers 20% of each order as commissions.
"Poshmark has become not just an ecommerce site, but also a community where you can build a style graph and find inspirations. There's a lot of sharing and community building that's unique to Poshmark," said Hans Tung, a partner at GGV Capital and early investor in Poshmark. Style graph refers to a page showing a seller's items for sale.
Other backers include Hollywood actor Ashton Kutcher and celebrity stylist-turned-designer Rachel Zoe.
Poshmark has become profitable during the pandemic, reporting a net income of $20.9 million in the first nine months of 2020, compared to a net loss of $33.9 million in the same period in 2019.
The company, which has 70 million registered users across the United States and Canada, has attributed its turn to profitability to increased demand and lower marketing spend during the pandemic. It has also seen more traditional retailers and brands join the marketplace as sellers, Chandra said.
Chandra said Poshmark plans to expand into other categories and new regions, with a more immediate interest in English-speaking countries.
Morgan Stanley (NYSE:MS), Goldman Sachs & Co (NYSE:GS) and Barclays (LON:BARC) are the lead underwriters for Poshmark's offering.
This week could be the biggest for new listings in more than five years, as companies seek to make the most of the strongest IPO market in two decades.