ThredUp Sets Starting IPO Valuation

ThredUp is eyeing a better than $1 billion price tag in its initial public offering. 

The secondhand online specialist — intent on cleaning out consumer’s closets and going easy on the environment — priced its IPO at $12 to $14 a share. 

That values the Oakland, Calif.-based company at $1.1 billion to $1.3 billion given 90.9 million shares outstanding. The company plans to sell 12 million shares — or 13.2 percent of its stock — in the offering, raising up to $168 million for working capital and to fuel growth.

Goldman Sachs & Co., Morgan Stanley and Barclays are lead book-running managers on the offering.

Despite the pandemic, the stock market has been hot with stimulus payments seen supporting consumers and many looking for a bounce back in spending once life returns to something more like normal. The Dow Jones Industrial Average closed above 33,000 for the first time this week (sliding back a modest 153.07 points to end at 32,862.30 on Thursday). 

ThredUp is just the latest company to take advantage of the high. 

In the IPO process, companies sell shares to big institutional investors who then turn around and start trading the stock on the open market. If everything works out, the company makes money, the first investors make money and there’s room left for the free market forces to work their magic. 

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Big first day gains are common, but valuations can also settle as investors place their bets. 

Poshmark, another secondhand concept, saw its valuation more than double during its first day on the market in January, valuing it at $7.4 billion. The company has since lost ground with a current market capitalization of $3.3 billion.

Luxury secondhand specialist The RealReal Inc. was first to the game and is now valued at $2.1 billion.

Together, the three companies make up a new secondhand sector in the public markets. The potential seems big. 

In its IPO filing, ThredUp argues “there is a massive opportunity to unlock secondhand supply and increase the lifecycle of existing apparel that sits unworn in closets” and pointed to government estimates that have 17.8 billion pounds of clothing and footwear deposited in U.S. landfills in 2017 alone. 

That’s the equivalent of 55 pounds of fashion per person. 

“We estimate that 16.9 billion pounds of the apparel thrown away in the United States could be recycled and reused, which we estimate is enough supply to fill approximately 1 billion ThredUp Clean Out bags every year,” the company said. “In 2020, we processed just over 1 million bags through our platform, which represents less than 0.1 percent of this potential supply we could unlock from closets in the United States.”

Now it’s just a matter of who can make the most off of the fashions consumers are hoarding at home.


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