Poshmark (NASDAQ:POSH) reported earnings that disappointed investors, and POSH stock has plummeted more than 30% as a result.
In focus is the fact that the company reported revenue of $79.7 million for the third quarter. That figure is up 16% year over year, but it came in below analyst estimates for $82.7 million. According to Poshmark, that miss is actually the doing of Apple (NASDAQ:AAPL).
In April, Apple launched IDFA changes, giving users the ability to keep certain apps from tracking their personal data. This has instantly had negative impacts on advertisers; Apple estimated that 60%-80% of users would opt out of app tracking.
According to Poshmark, these IDFA changes are responsible for lackluster quarterly revenue. This puts the retailer in the same boat as companies like Snap (NYSE:SNAP) and Meta Platforms (NASDAQ:FB).
But beyond that, Poshmark is not having an exciting year. POSH stock is down 82% year to date, compared to a 26% return from the S&P 500.
With this in mind, let’s dive into its earnings to see why else POSH stock is plummeting 30%.
POSH Stock Earnings Highlights
- Poshmark reported gross merchandising volume (GMV) of $442.5 million, up 18% YOY.
- Active buyers over the trailing 12 months (TTM) came in at 7.3 million, up 17% YOY.
- Adjusted EBITDA came in at $0.3 million, down from $15 million in the previous year.
- Cash, cash equivalents, and marketable securities were $589 million as of Q3 2021.
- During the quarter, Poshmark acquired Suede One, a platform that authenticates sneakers.
- The company also expanded its partnership with Affirm (NASDAQ:AFRM).
- Additionally, it launched the Brand Closets program, allowing large brands to open a closet on Poshmark to directly engage with customers.
- Poshmark also expanded operations into India.
What Is the Outlook for Poshmark?
Poshmark issued Q4 revenue guidance of between $80 million and $82 million, missing estimates of $85 million. It seems Poshmark is still figuring out how to circumvent Apple’s IDFA changes. The company stated that it would spend more money on TV ads, marketing and partnering with social media influencers to counter the changes.
Spending more money on marketing may hurt Poshmark’s balance sheet in the near term and lead to additional losses. In my view, it would be best to watch POSH stock from the sidelines as it adjusts to address Apple’s policy changes.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
