Poshmark to Sell Itself for Less Than Half Its IPO Price to Korea’s Naver

The transaction values Poshmark at about $1.6 billion, including about $580 million of cash reserves, Naver said. Poshmark’s peak market capitalization was $7.3 billion, which it hit on the day it went public, according to FactSet.

Poshmark looks and behaves much like Instagram, motivating sellers to give and receive comments and “likes” and allowing users to follow their favorite sellers. Similar to

eBay Inc.,

EBAY 1.11%

sellers take photos of their own items and sell them directly. Poshmark collects fees on sales on its marketplace but doesn’t hold any inventory.

While the Covid-19 pandemic gave a boost to online shopping, Poshmark’s losses have widened and its revenue growth has slowed this year. After reaching $90.9 million in revenue in the March quarter, revenue edged down to $89.1 million in the June quarter and Poshmark forecast it would come in between $85 million and $87 million for the September quarter.

Naver is South Korea’s largest web portal and operates as a major search engine ahead of Google locally. It also offers mobile payments and online shopping. Outside Korea, Naver is behind the Line messaging app and is a major operator of webtoons, or digital comics made for reading on online and mobile platforms. In 2021, the South Korean company acquired Wattpad, a Toronto-based storytelling platform, for $600 million.

The companies said the Poshmark transaction is expected to close by the first quarter of 2023. The Redwood City, Calif., company will become a stand-alone U.S. subsidiary of Naver. Poshmark’s founder and Chief Executive

Manish Chandra

and his team will continue to lead the company.

Founded in 2011, Poshmark has billed itself as a way to marry sustainable commerce with social media and says it has more than 80 million registered users. The number of active buyers—people who purchased on the site in the past 12 months—was about 8 million in the last quarter, the company reported. It faces competition from

Etsy Inc.,

eBay,

ThredUp Inc.,

the

RealReal Inc.,

Facebook Marketplace and other marketplaces that let people buy or sell secondhand goods.

The companies said the combination would help Poshmark expand into Korea and other parts of Asia. Poshmark currently offers its app to users in the U.S., Canada, Australia and India. It would also give Naver a bigger foothold in the U.S. market.

Naver expects the deal will enable savings totaling around $30 million for the two companies. That includes gains from reducing redundant costs and Poshmark’s expected gains from accessing Naver’s live-commerce solutions and other technologies, said Kim Nam-sun, Naver’s chief financial officer, in a conference call.

Naver’s shares fell by nearly 9% on Tuesday following news of the Poshmark acquisition.

At a press conference in Seoul, Naver CEO

Choi Soo-yeon

played down the stock slide. The purchase was made at a very reasonable price, she said, expressing confidence that the so-called customer-to-customer market that Poshmark operates in would continue to grow in the years ahead.

With the acquisition, Naver expects to help Poshmark improve its marketing campaigns and to pursue partnerships with the South Korean company’s own offerings. As an example, Ms. Choi cited Weverse, an online marketplace for K-pop merchandise it jointly owns with HYBE Co., the agency behind boy band BTS.

“We will continue to pursue new projects and study the best ways to create service synergies between the two firms,” Ms. Choi said.

Write to Jiyoung Sohn at jiyoung.sohn@wsj.com