Poshmark Buys Suede One to Authenticate Sneakers; Shares Jump 6.7%

Poshmark, Inc. (POSH), an e-Commerce portal for buying and selling new or used clothing, shoes, and accessories, has announced the acquisition of Suede One, an online authentication platform for used sneakers and luxury items, for an undisclosed amount. Following the news, shares jumped 6.7%, closing at $24.64 on Wednesday.

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Suede One was founded in 2020 to help resellers ensure the speedy, smooth, and accurate verification of products, and to protect them from fraud. Its technology uses machine learning, computer vision, and expert human review to authenticate sneakers online. For some of the popular sneaker brands, such as Jordan 1s and Yeezy 350s, Suede One claims a 99% accuracy rate for the majority of submissions through automation. For other sneakers, the company uses its proprietary authenticator tool along with a human expert review.

This is Poshmark’s first acquisition and establishes the company’s customer-driven focus to ensure that they get the best quality of products through its portal. The company’s segment Posh Protect offers a full refund for any products that do not match descriptions, and Posh Authenticate provides free verification for orders valued at $500 or more. POSH serves more than 80 million registered users across the U.S., Canada, Australia, and India.

Together, Poshmark and Suede One will accelerate their services for the reseller community and offer authentication for sneakers at multiple price points. The companies aim to expand their services to various other categories. (See Insiders’ Hot Stocks on TipRanks)

Commenting on the deal, Manish Chandra, Founder, and CEO of Poshmark said, “Suede One has built impressive capabilities in virtual authentication that will allow us to deliver tangible benefits to our community, scale our authentication services in a meaningful way, and accelerate our momentum in sneakers as well as luxury goods, two of the fastest-growing categories in the resale space. We are thrilled to welcome the Suede One team to Poshmark and look forward to what we can build together.”

Following the news, Stifel Nicolaus analyst Scott Devitt maintained a Buy rating on the stock and believes that Suede One’s authentication abilities will be additive to Poshmark’s core business, enhance its platform’s attractiveness, and aid its Posh Protect offering.

Overall, the stock has a Moderate Buy consensus rating based on 5 Buys and 3 Holds. The average Poshmark price target of $43 implies 74.5% upside potential to current levels. Shares have lost 75.7% since listing on January 14, 2021.