Poshmark Set To Be Acquired by Korean Conglomerate Naver

No-moat Poshmark (POSH) announced on Oct. 3 that it will be acquired by narrow-moat South Korean conglomerate Naver in a deal worth $1.2 billion, set to close during the first quarter of 2023. The takeout price of $17.90 per share represents a 3% premium to our previous fair value estimate of $17.40, suggesting Poshmark shareholders could have held out for a more generous consideration, but represents a 34% premium to the 30-day volume-weighted average price, which appears proportionately more generous. Despite the slim premium, we like the move from the perspective of the resale company prima facie, considering that the difficult macroeconomic environment, stagnant recent growth, and the need to invest in newer international markets, buyer acquisition, and the firm’s technology stack would otherwise leave the company without a near-term catalyst to realize our ex-ante intrinsic valuation. Given the dearth of overlap in end markets—most of Naver’s business sits in Asia-Pacific—and product suite, we foresee few regulatory impediments to deal closure and plan to raise our $17.40 fair value estimate to the $17.90 takeout price. We maintain our Standard capital allocation rating for Poshmark.

The move validates our e-commerce consolidation thesis, allowing Poshmark to incubate under the aegis of a profitable company and without the same degree of quarterly scrutiny it would be subjected to as a standalone entity, though we wonder if expected synergies might be overstated. While $30 million in projected run-rate savings would accelerate the firm’s route to profitability by two years (to 2024, from 2026), synergies beyond search optimization and back office rationalization look optimistic, with livestream commerce yet to take off in the U.S., with only modest upside from insourcing payment processing given Poshmark’s flat fee structure, and with accelerated marketing investment looking dubious against a backdrop of weaker consumer spending and return on advertising spend.