TechCrunch reported earlier today that StockX, a leading online marketplace for product resale, secured $275 million in funding, achieving an approximate valuation of $2.8 billion.

While relinquishing a tenth of company ownership for over a quarter of a billion dollars is increasingly typical for rapidly expanding, later-stage software companies, it’s particularly noteworthy for a platform primarily known for its prominence in the sneaker resale market. However, considering StockX’s performance, this funding round is quite reasonable, and the company may be positioned for an initial public offering within the next year.

As Matt Burns detailed in our coverage of the funding, StockX experienced a 260% increase in sales outside of its domestic market during the third quarter, compared to the same period last year. The company also processed half of its 13 million total transactions over the past 12 months.

To gain a more comprehensive understanding of this funding, I investigated additional historical growth data to provide context:

•  In the middle of 2019, StockX attained unicorn status after a $110 million funding round, reporting monthly gross merchandise volume exceeding $100 million. At that time, the company employed approximately 800 individuals.
• Following this investment, a former executive from eBay and a former vice president of the New York Stock Exchange assumed the roles of CEO and board member, respectively. Scott Cutler continues to serve as the company’s chief executive.
• StockX reported surpassing $1 billion in gross merchandise volume in 2019, encompassing resales of streetwear and luxury goods in addition to sneakers. The company concluded 2019 with a workforce of around 1,000 employees.
• By mid-2020, StockX announced it had exceeded $2.5 billion in gross merchandise volume and completed 10 million trades, with half occurring within the preceding year.

To assess the significance of these figures, it’s necessary to translate gross merchandise volume into revenue, which requires a closer examination of StockX’s fee structure.

Earlier this year, StockX introduced a 3% fee for buyers. The platform also levies a 3% payment processing fee on sellers, alongside a variable transaction fee for footwear; this fee decreases as sellers list more items, ranging from a maximum of 9.5% to a minimum of 8%. Other product categories are subject to fixed fees, including 9.9% for watches and 14.5% for handbags.

Considering these fees, approximately 9% of the sale price, plus 3% in transaction fees and an additional 3% from buyer fees, equates to $15 in revenue for every $100 in merchandise sold on StockX, based on current pricing and estimations.

Based on its mid-2019 gross merchandise volume of $100 million per month, StockX would have generated $15 million in monthly revenue. While factoring in costs such as authentication, the company’s precise gross margin remains unclear, this revenue figure translates to an annual run rate of $180 million.

The company has experienced growth since these 2019 figures.

StockX indicated that over half of its 10 million trades occurred within the year ending June 2020. In its recent funding round, this number increased to “13 million transactions – with 50% occurring in the last 12 months,” as reported today. Consequently, the company has likely grown by 15% to 25% since mid-Summer. Furthermore, the addition of the 3% buyers fee this year has increased its overall revenue share by approximately 25%, further enhancing reported figures.

The combined effect of increased fees and rising sales volume should result in substantial revenue growth for the company. If its 2019 run rate was $180 million, the company is likely well above the $200 million mark as 2020 concludes, and potentially even higher.

This leads us back to the point made by Burns this morning, following his detailed overview of StockX’s new funding round:

An IPO for a marketplace specializing in reselling shoes? Absolutely! Given the available data, it seems entirely plausible.