Whatās Going On Here?Naver, South Koreaās biggest internet company, announced this week that itās buying US clothing reseller Poshmark in a deal worth $1.2 billion. What Does This Mean?The US online second-hand fashion market's already worth a sleek $80 billion at the moment, and it's predicted to hit a show-stopping $130 billion by 2025. And with that hefty twelve-figure forecast, itās no surprise that itās attracting overseas attention. Just look at Naver: South Koreaās biggest internet company is buying US second-hand fashion marketplace Poshmark at nearly $18 a share ā a whole 15% more than what they were worth before the deal was announced. The acquisition is Naverās biggest ever and reveals the companyās commitment to becoming a global player in the online fashion space: its ambitious plan involves enriching Poshmarkās social shopping platform ā which boasts an 80 million-strong customer base ā with new live-streaming features that are popular in Asia. And at the same time, itāll give Poshmark access to Naverās vast ecommerce experience, while letting the platform continue to operate independently. Why Should I Care?For markets: Dangerous liaison.
It seems investors werenāt sold on Naverās grand plan. In the wake of the news, the companyās shares hit a low they havenāt seen since April 2020 ā and not without reason. After all, Poshmarkās stock price has been in near-constant freefall since it went public last year, and the fact itās likely to post a $70-million loss this year hardly screams āBuy me!ā. All in all, then, Naverās going to have to put its shoulder to the grindstone if it hopes to turn this deal to its advantage.
Zooming out: Dressing down.
With the global economy faltering and ecommerce growth going slack, circumstances seem to be set against Naver. Look at fashion retailer Boohoo: last week the company reported its first ever drop in sales in the first half of the year ā and with cash-strapped consumers skimping on fashion sense in favor of financial sense, the company found itself forced to slash profit predictions for the rest of 2022 too. | 