Here we are again. Again.
Yes, it’s another morning in which we have to discuss a venture-backed technology company going public at a price above its IPO range.
This time it’s Poshmark, which priced its IPO at $42 per share last night, comfortably ahead of its $35 to $39 range that already greatly boosted the company’s valuation. The consumer-to-consumer used fashion marketplace sold 6.6 million shares at its IPO price, raising a gross $277.2 million before other possible shares are sold.
According to Crunchbase data, that’s the biggest round Poshmark has raised in its history.
The company was able to so greatly boost its valuation in the process that the resulting dilution is minute. This is the late-2020, early-2021 IPO market in action: Pick a private company, boost its worth greatly in its public offering when comparing to its last private valuation, send it to trade and watch its worth — usually — soar.
Then venture capitalists get to complain that Wall Street is underpricing their children while, from where I sit, it always appears that the VCs who put the last money into the company before its public offering tend to do even better than the bankers.
A useful question to ask: Who is underpricing whom?
But this morning we have some work to do. First, what are Poshmark’s final simple and diluted valuations, what revenue multiples does it sport today, and, what do we think its final pricing means for public markets in general?
A hint: Nothing that follows is bearish.
Poshmark’s IPO pricing
There are a few ways to consider Poshmark’s value. One is to use its simple share count, a figure that doesn’t include vested-yet-unexercised stock options and RSUs. Another is to include those shares.
Here are the resulting valuations: