thredUP Shares Drops 11% on Q4 Loss & Muted Outlook

thredUP (NASDAQ: TDUP) shares sank over 11% in extended trading hours on March 7, after the online resale platforms for women’s and kids’ apparel, shoes, and accessories reported a wider-than-expected Q4 loss and also issued guidance lower than Street’s expectations.

Q4 Performance

The company reported an adjusted loss of $0.18 per share, which fell 2 cents short of the Street’s estimated loss of $0.16.

However, revenues jumped 68% year-over-year to an all-time high of $72.9 million and exceeded consensus estimates of $70 million. The increase in revenues reflected a surge in Active Buyers, which increased 36% to 1.7 million, along with a 69% growth in orders.

Meanwhile, gross margin declined by 240 bps to 66.1% mainly due to the Q4 acquisition of Remix.

FY2022 Outlook

Looking ahead, management issued financial guidance for FY2021.

FY2022 revenues are forecast to be in the range of $330 million to $340 million, lower than the consensus estimate of $333.1 million. Gross margin is expected to range between 64% and 66%, while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin loss is projected to fall between 15.5% and 13.5%.

For Q1, revenues are forecast to be in the range of $70 million to $72 million, lower than the consensus estimate of $76.9 million. Gross margin is expected to range between 65% and 67%, while adjusted EBITDA margin loss is projected to fall between 19% and 17%.

CEO Comments

thredUP CEO, James Reinhart, commented, “In 2022, we expect our continued investment in our infrastructure both domestically and internationally will enable us to keep building the foundation for the future of resale on the internet.”

Wall Street’s Take

Following the Q4 results, Wells Fargo analyst Ike Boruchow reiterated a Buy rating on thredUP with the price target of $20 (164.9% upside potential).

Boruchow continues to have a positive stance on the stock despite slower Q1 trends. He stated, “We continue to have confidence in the TDUP story LT and name TDUP as one of our “Top Picks”, Street estimates–while mismodeled–still need to come lower. That said, we remain confident in the model’s ability to scale looking to 2023 (particularly lapping TY’s investments) and beyond.”

Consensus among analysts is a Strong Buy based on 4 Buys and 1 Hold. The average thredUP stock price projection of $19.75 implies 161.59% upside potential to current levels, at the time of writing.

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