Poshmark sells itself to Naver amid market woes

Hailey Chin

E-commerce company Poshmark Inc. agreed to sell itself to South Korean technology company Naver Corp. for $1.2 billion.

Naver bought Poshmark for $17.90 per share. This is 15% higher than Poshmark’s value of $15.57 at the beginning of the week, but this price is lower than its value when the company first went public at $42 per share.

Naver can be thought of as “the Google of Korea.” Korea is one of three countries where Google is not the dominant search engine, the other two countries being China and Russia.

The company is home to the largest number of South Korea-based bloggers. It is also home to the largest number of digital stories through services like Wattpad and Webtoon.

Wattpad is a Toronto-based company that offers a platform for reading and writing original stories. It was acquired by Naver for $600 million on May 10, 2021. Webtoon is one of the largest webcomics communities in the world, with many different genres available in over 30 different languages.

When Poshmark was founded in 2011, it was promoted as “a mobile fashion marketplace built around real-time social experiences,” according to its website.

The company’s competition includes online marketplaces that allow people to buy secondhand items, including eBay Inc., Etsy Inc. and ThredUp Inc.

Within a year, Poshmark garnered over 1,000 users who would open the app for an average of 20 to 25 times per day, according to the Poshmark Seller Guide. As of 2020, the company has over 60 million users, containing a mix of social buyers and sellers.

In the last 12 months, the number of active buyers was 7.6 million, according to a press release.

The deal between Poshmark and Naver was announced on Oct. 3. With this deal, Poshmark will gain access to Naver’s extensive network of users and technology products. Naver will allow South Korea to gain ground in North America’s resale industry.

“The combination will create the strongest platform for powering communities and re-fashioning commerce,” Naver CEO Choi Sooyeon said in a press release. “Poshmark is the definitive brand for fashion in the United States that provides a social network for buying and selling apparel. Naver’s leading technology in search, AI recommendation and e-commerce tools will help power the next phase of Poshmark’s global growth.”

With the acquisition, Naver also plans to help Poshmark with its marketing strategies and establish partnerships with the South Korean company’s own services.

To bolster this idea, Choi points to Weverse, an online marketplace that sells K-pop merchandise and allows fans to interact with idols.

The platform is jointly owned by HYBE Co. Much of the platform’s success and popularity stemmed from BTS, a South Korean boy band whose immense popularity immediately drew attention to the new platform. Fans flocked to the app for the opportunity to interact with the band.

Due to its increasing popularity, Weverse was eventually able to feature Western artists such as Gracie Abrams and Max Schneider, who goes by the name “MAX.”

Although the online shopping industry thrived with the COVID-19 pandemic, Poshmark actually lost more money while revenue showed little growth.

After Poshmark earned $90.9 million in revenue in March, its revenue declined to $89.1 million in June. The company projected that its revenue would be between $85 million and $87 million in September, according to The Wall Street Journal.

Naver stocks dropped to 9% on close in trading in Seoul after the deal was announced.

During a news conference, Choi expressed her confidence in the deal, as she believes that Poshmark will continue to grow in the future. Similar remarks were made by Poshmark CEO Manish Chandra.

“What will change is our capacity to invest in the areas that will enable our community to thrive for the next decade and beyond,” Chandra said in part in a statement. “The future of fashion is in your closet, and I believe this future is brighter than ever.”