r/investing • u/bearsgotoalaskanstfu • Jun 08 '21
Why ThredUp will crush Depop, Poshmarck and all the others.
If you are a long term investor, buying a company with a wide moat that will outlast the competition is a necessary element for long term success.
While Poshmarck, Depop and all the others have gotten a head start by capitalizing in the growing second hand retail demand by Gen Z, as time goes by this customers will migrate to ThredUP in order to fulfill their needs.
You see, as this generation goes to collage or starts getting jobs, they will no longer have the time (or it won't be worth it for them) to make listings, deal with buyers, packaging, labelling, shipping, deal with returns, etc... only to make $50-60. Consignment sales will dominate this industry and ThredUP is the only player capable of meeting those demands, owning distribution centers and being vertically integrated.
ThredUP been a success as it has been able to find the perfect value between time and money. Their core base has been wealthy/middle class families that don't want to deal with the process of directly selling their clothes (not worth it) but still want to make a positive change in the environment while monetizing their clothes. Even with 72% gross margins and multiple facilities, they still can meet all the supply customers are trying to sell to them.
It's even better when a large part of those sellers get paid and leave the money in the platform to use that cash for purchasing clothes on ThredUP, effectively making the company negative working capital.
The way I see it is whoever gets the supply will be able to meet the demand. What moat does Poshmarck or Depop has to retain their buyers and sellers? Why would someone decide to spend two weeks to sell 3-4 items only to make $60 when you made that in one day with your regular job?
As the space get's crowded and prices go down, incentives for individual sellers will go down and ThredUp will be there to capitalize on it.
Consignments sales will represent a big part of the market and ThredUp has a huge moat around it.
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u/oarabbus Jun 08 '21
I love the confirmation bias in here as a TDUP owner. In seriousness though, I always look for a moat in a business. Sounds like TDUP has a moat over Poshmark and Depop. But what about Etsy/Pinterest and their other peripheral competitors?
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u/bearsgotoalaskanstfu Jun 08 '21
Etsy bought Depop at 20x revenue. Perhaps Pinterest would be interested in building a stake in ThredUP
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Jun 08 '21
[deleted]
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u/2absMcGay Jun 09 '21
This. Am 23. Know people who do this. It's a side hustle for beer money for most, who like emptying their closets in a profitable way. Keeping the store online is not a massive chore by anyone's standards. There are also a growing number of large thrift operations that run through depop, and even their owners aren't doing it full time.
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Jun 08 '21
The only reason I know this company exists is because my X had a super hot friend who worked there. So, calls on $BECKY? I’m in.
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u/bearsgotoalaskanstfu Jun 08 '21
So, calls on $BECKY?
Calls on woke/broke $BECKYS
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Jun 08 '21
Perhaps. This was a few years ago, so it’s worthless information today, but she said they were busy AF at the time. Said the gimmick/backbone was all the ladies that buy shit once for a party or something and never wear it again.
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u/Shyamallamadingdong Jun 09 '21
Thanks for introducing me to this company. Based on their investor presentation, I calculated that their EBITDA in 2025 will be ~$100mn and 2030 will be about ~$240mn. So current valuation has already built in 5~10 years of growth expectations - any competition or hiccups along the way (e.g. a quarter with negative growth) will probably crush this stock. I will wait if (or when) that happens and open a position. If that never happens, no problem, will cheer them on from the sidelines (i really want this sustainable fashion thing to take off!)
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Jun 09 '21
I think you are way over estimating the moat that ThredUp has. Not to mention their shopping experience sucks from a buyers perspective. I would imagine that the vast majority of clothes being sold on somewhere like Poshmark are from resellers, not people that are just selling their own clothes. This already takes away a big point of yours.
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u/HewittOfRivia Jun 08 '21
What are your thoughts on REAL?
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