What Happened?
Shares of online fashion resale marketplace ThredUp (NASDAQ:TDUP) jumped 44.2% in the afternoon session after the company reported stronger-than-expected preliminary fourth-quarter results, signaling a return to growth. ThredUp anticipates Q4 2024 revenue for the US market between $66.7 million and $67.2 million, marking a 9% year-on-year increase, a sharp turnaround from its earlier forecast of a 6% to 2% sales decline. Gross margin is also expected to improve to between 80.2% and 80.4%. The improved sales and gross profits are expected to drive an Adjusted EBITDA margin of 6.4% to 6.9% (vs. previous guidance of 0.0% to 2.0%).
However, it is important to clarify that these figures don't include the Remix business, which TDUP divested from, ending its presence in Europe. Even with this divestiture, the outlook was better. Preliminary guidance, which included Remix, predicted an 8% sales drop year on year—still far better than the previously expected 15%–17% decline. Overall, these results underscore management's improved execution capabilities.
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What The Market Is Telling Us
ThredUp’s shares are extremely volatile and have had 67 moves greater than 5% over the last year. But moves this big are rare even for ThredUp and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock dropped 52.6% on the news that the company reported weak second-quarter earnings. Its full-year revenue guidance missed, and its revenue guidance for the next quarter fell short of Wall Street's estimates. Notably, management called out "challenges in both the U.S. and Europe." Overall, this was a mediocre quarter for ThredUp.
ThredUp is up 33.3% since the beginning of the year, but at $1.88 per share, it is still trading 20.3% below its 52-week high of $2.36 from March 2024. Investors who bought $1,000 worth of ThredUp’s shares at the IPO in March 2021 would now be looking at an investment worth $94.00.
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