ThredUp shares jump on IPO day

ThredUp has seen a very successful IPO launch. The resale platform opened trading today at 14 dollar per share and as of 1:15 pm, shares exceeded 18 dollars.

Despite the success of their IPO, ThredUp operated at a net loss of 48 million dollars in 2020, according to an SEC filing. While the resale market is still growing, it’s very hard for most platforms to turn a profit in the early stages. However, investors are attracted to the growing retail trend and see it as something substantial to bet on.

ThredUp wants to use the capital raised from the IPO to invest in automation and infrastructure. The readily tradable stock can also be used to pay executives, cut deals, and gauge its financial position.

ThredUp’s business model differs from that of its competitors it takes control of goods from consumers with a back-end operations that takes bags of clothes from cleaned-out closets, sort them, recycles some, photographs others, and posts them for sales. Consumers get a cut of the sale, and it’s all in line with fashion’s new sustainability focus.

Last year, ThredUp’s revenue rose 14 percent to 186 million dollars so despite the net loss, the company is seeing growth. They currently have 1.24 million active buyers.

Image: Thredup.com