Poshmark, the online marketplace for pre-owned apparel, beauty products, and home goods, is preparing to begin public trading on the Nasdaq tomorrow. The company, headquartered in Redwood City, California, has been operating for nine years and priced 6.6 million shares at a higher-than-anticipated value, as reported by Bloomberg.

The company initially projected a share price between $35 and $39, but strong investor interest allowed for a final price of $42 per share. This valuation places the company’s worth at $3.5 billion when considering fully diluted shares.

Industry analysts predict a successful transition for Poshmark from a private to a publicly traded entity, mirroring the recent positive reception of other new consumer brands like Airbnb, DoorDash, and Wish, despite Wish’s more moderate performance since its initial public offering in mid-December.

The company possesses several advantageous factors.

Since its launch, over 70 million Poshmark users have bought and sold more than 130 million items on the platform. Furthermore, the company’s financial performance is improving. Poshmark generates revenue through commissions on sales between users and from wholesale product sales, and achieved profitability for the first time last year. According to its S-1 filing, net income reached $21 million on revenue of $193 million for the nine months ending September 30, 2020, a significant improvement compared to the $34 million net loss on $150 million revenue during the same period in 2019.

Unlike many traditional retail businesses severely impacted by pandemic-related closures – including J. Crew, Neiman Marcus, and Brooks Brothers, all of which filed for bankruptcy – Poshmark simply facilitates transactions. This model avoids the costs and challenges associated with managing physical inventory.

The resale market is currently experiencing substantial growth. Purchasing pre-owned items offers affordability and provides a revenue stream for sellers. Additionally, consumers are increasingly focused on sustainability, making the purchase of used goods a more environmentally responsible choice than supporting fast fashion brands. (Forever 21, a prominent fast-fashion retailer, filed for bankruptcy in 2019.)

However, Poshmark faces challenges, including the need to enhance the customer experience, based on feedback from various review websites. The company has consistently received criticism regarding its quality control and customer support services.

While currently profitable, the level of profitability may require improvement in the near future.

Poshmark, having secured $153 million in funding from venture investors, must also clearly articulate its unique position to public market investors, differentiating itself from established competitors like eBay and The RealReal, which went public in 2019 and currently has a market capitalization of approximately $2.3 billion.

The company will also need to distinguish itself from emerging rivals, particularly ThredUp, which submitted a confidential IPO registration statement to the SEC last fall, shortly after Poshmark did the same.