You wouldn’t know this from the way the stock has performed lately. Short sellers have been attacking it, and now hold a 21.6% stake in its float, according to Yahoo! Finance.
The stock has dropped from its high of $104.98 shortly after it went public on Jan. 14 and recently hit a low of $25.62. As of Aug. 20, POSH stock was at $26.53. So is the stock is at a trough? I think so since my target price is $41.20.
Overall, the reason I believe this is because the company is now clearly producing large amounts of free cash flow (FCF). In Q2, its sales were up 22% year-over-year (YoY) to $81.8 million. The company’s “take rate” was high at 18.2% since its Gross Merchandise Value (GMV), the total of all transactions, was $449.6 million.
This take rate was even higher than the take rate at Etsy (NASDAQ:ETSY), which I recently wrote about. Their take rate is lower at 17.4% and their price-sales (P/S) multiple for 2022 is 9.28 times vs. 5.10 times for Poshmark. So clearly, POSH stock is worth more than its present price. But how much more?
