News tonight that Poshmark is selling itself to South Korea’s Naver, for just $1.2 billion—less than half Poshmark’s value when it went public early last year—signals that it’s not just private equity folks taking advantage of the stock market slump to shop for more reasonably-priced companies. Naver proclaims itself as South Korea’s biggest internet firm and promises that its search and AI tech will “help power the next phase of Poshmark’s global growth.” We’ll have to wait and see whether that works out. What we do know is that anyone who bought into Poshmark’s IPO will have to chalk the losses up as a lesson in investing.

Poshmark was a member of an IPO generation that benefited from soaring valuations and investors’ willingness to overlook the flaws in some of the businesses going public. In Poshmark’s case, it went public on the back of a solid profit in the first three quarters of 2020. But that was driven by a drop in marketing costs during the early phase of the Covid pandemic, which we noted might not last in this report at the time. Indeed, the trend didn’t last. Poshmark’s bottom line began bleeding red ink last year, as marketing costs jumped. So far this year, losses are running 66% during the same period last year. No wonder that Poshmark’s stock price fell as low as $10.80 in late August—about a quarter of its $42 IPO price. Naver is paying $17.90.