Poshmark CEO: Naver buyout ‘a great win’ for shareholders, employees

Poshmark CEO Manish Chandra joins Yahoo Finance Live to discuss the company's $1.2 billion Naver buyout deal, the state of the re-commerce market, economic uncertainty, and the outlook for Poshmark.

Video transcript

- Poshmark has agreed to sell itself for $1.2 billion to South Korean internet company Naver. Shares are rocketing higher here in the early going. Let's get right into this deal with Poshmark founder and CEO Manish Chandra. Manish, always good to see you here. Big day, I'm sure, for you and the team. Why did you choose now to make this transaction?

MANISH CHANDRA: Well, it's a great win for our shareholders. It's a great win for our employees. And ultimately, it's a very good win for our community. By bringing Poshmark and Naver together, we actually invest in the right way. We accelerate growth and, ultimately, build a much bigger and much more global Poshmark. There's a lot of synergies, a lot of complementary strengths, and we're excited about the future of Poshmark.

- Manish, did you run an active sales process here? Was this something you were seeking? Or did Naver approach you?

MANISH CHANDRA: Yeah. No, we were not seeking. Naver approached us. We initially spend time looking at our deep strategic partnership with them. And at some point, it made more sense to come together as one company. And that's the action we took over the last few months.

- Manish, I have to ask-- it's Julie here. you came public at $42 in early 2021. The stock has gone down. You started to see a little bit of a recovery lately. When Sozz asked about timing, just to build on that, why not wait for your stock price to hopefully recover a little more before doing a sale?

MANISH CHANDRA: Yeah. This deal represents roughly a 48% premium over a 90-day revamp and a 34% premium over a 30-day revamp. So when we look at it from a premium perspective, it's actually a very attractive deal. As we look at the business, we've looked at it from a long-term perspective. Stock market is volatile. We sort of have seen the market being extremely volatile over the next year and a half. But looking at sort from our shareholders' perspective, we felt like it was a good ROI.

From a business perspective, it was the right thing to do. We are starting to invest in many of the technologies that we have complementary overlap, including live streaming, some of the search discovery technologies, as well as global expansion. So from a timing perspective, it really did make sense to bring the two businesses together now.

- Manish, it's really interesting in the resale market right now. It seems like there's a flood of sellers that are coming into the market because they're looking to perhaps also just shore up some of their own cash, especially considering the consortium of consumers that you go after typically for Poshmark. But even as you think about the buyer part of that component too, what are actual sales looking like between the number of buyers and sellers and transactions of that merchandise volume that is actually taking place and being exchanged on the platform right now, considering the consumer discretionary headwinds that we had seen over the summer and could persist?

MANISH CHANDRA: Yeah. The recommerce economy, particularly the Poshmark economy, is pretty unique in the sense that buyers are sellers and sellers are buyers. There's a huge overlap between the two components. And so a lot of times people are recirculating their closet. And that creates a very different kind of economy than other fashion places. The second thing is because we have an asset-lite model, the merchandising on Poshmark is extremely dynamic. So what happens is if a certain trend is going up or a certain fashion trend is changing, our Sellers are quickly able to adjust to that.

Third thing is we've created a shaping system that is super easy for people to engage with. And in fact, we recently announced at PoshFest that now you don't even need a label. You can just use QR code and ship. So that partnership has allowed us to scale the business and provide a very simple way for people to not just transact, but ship.

And then more recently, we've started to introduce live selling, which gives people another way to connect in a deeper way, which is super missing in this world in terms of fashion and connectivity. So we feel that we are pretty well poised to sort of deal with some of the challenges that consumers are facing. But more importantly, Poshmark is home to millions of entrepreneurs, which allows people to make money and grow their household income in these tough times.

- Manish, as a founder, is it a little bittersweet to sell a company that you created?

MANISH CHANDRA: It's a milestone. I'm not going anywhere. We're continuing to build Poshmark. In fact, part of the partnership is that they are keeping Poshmark as an independent subsidiary. So I feel it's a phase in the journey as opposed to the end of a journey. So I'm excited about the next phase of growth for Poshmark.

- What does the reality of Poshmark underneath of Naver look like? Naver is a company that's also built out a lot of the live selling component to it as well. What would you like to see Poshmark take on, especially with this acquisition once it completes fully?

MANISH CHANDRA: Live selling is really a great area of investment for us. It's something that we just started to do some beta testing with. And our community is very excited about it. People are really seeing some very, very powerful early results. I think it's going to take some time to fully expand it. Ultimately, we'd like to see hundreds of thousands, if not millions of sellers live selling on the platform. It's a very, very fun, very unique, very intimate way of selling.

At PoshFest, we did our first-time fashion show, where we were doing a fashion show, and we were live selling every outfit on the fashion show. So there's a lot of unique integration possibilities in the future. I think there's depth of search and technology that Naver can bring plus global expansion. They are very strong in many of the markets, including Korea and Japan, we see as very attractive markets for Poshmark, and difficult markets to enter alone. So that also gives us access to that. So excited about a whole bunch of synergies, global expansion, and also depth of technology partnerships that we can bring to the table.

- So that is sort of longer term. I'm curious in the sort of short to medium term. I'm looking ahead to the holidays. And I'm curious what you're seeing in terms of signal from your customers, both buyers and sellers for that matter, what kind of trends you're seeing, and what kind of indications about overall consumer spending you're seeing.

MANISH CHANDRA: When we look to the holidays, I feel like this is going to be a pretty important holiday season and a moment in the world of second hand and recommerce. We have introduced this concept of second hand Sundays where sellers can get together and really start to connect shoppers and sellers around the notion of second hand gifting. And so it's going to be, I think, a pretty unique time where finally people start to think of second hand as a very beautiful thing. If you look at the younger consumers, many of them are exclusively shopping at second hand.

Ultimately, if you look at the change in the world environment, if you look at the planet health, I feel like people are becoming much more conscious of the fact that any gift giving consumption has to tie with responsibility. I think it's going to be a very different kind of holiday. And then the consumer wallet is strapped. And a platform like Poshmark really gives you great value on the items you're buying. So when you combine value with the focus on planet and the ability to make money, I think it's going to be a powerful Christmas for recommerce platforms in general.

- Manish, how do you believe that consumer-driven secondhand selling holds up against some of the manufacturer-driven secondhand selling? I think about a brand like Lululemon that wants me to bring back my ABC pants so that they can resell them. And they're going to give me some type of discount.

MANISH CHANDRA: Yeah. I mean, if you look at the history of retailing, right, as sort of something that is specific or initially niche and as this becomes more mainstream and becomes part of the persona, it will get adopted by brands and retail across the ecosystem. If you think of the rise of outlet shopping, you know, pioneered by the likes of TJ Maxx and Ross, now outlet shopping is a portion of many of the large retail architecture. So we feel second hand being adopted by brands, being adopted by retail is in so many ways a symbol that this category is becoming pretty massive and is going to be a dominant category over the next decade.

- Manish, thanks so much for joining us today. Big day for you. Congratulations on the deal. Manish Chandra, founder and CEO of Poshmark. Thanks.