Naver Slumps After Announcing $1.6 Billion Poshmark Acquisition

By Kwanwoo Jun

Naver Corp. suffered its biggest share-price drop in more than seven years Tuesday after what it said was a $1.6 billion deal to acquire U.S. online-fashion reseller Poshmark Inc.

Shares in the South Korean internet giant fell as much as 9.3% to 175,500 won ($122.41)--the biggest daily percentage drop since in July 2015, according to FactSet. The stock closed 8.8% lower, as the broader Kospi market gained 2.5%.

Naver's retreat suggests that investors aren't thrilled with its decision to pay $17.90 a share in cash for Poshmark. The fashion company priced its initial public offering at $42 a share in January 2021, and has since slumped, closing at $15.57 on Monday.

The transaction values Poshmark at about $1.6 billion, including about $580 million of cash reserves, Naver said

But the U.S. company's losses have widened amid slowing revenue growth this year as the pandemic-driven boost to online shopping fades.

Naver has recently been pressured by weakening profit margins amid higher marketing and labor costs. Analysts note that wages and headcount at Naver are rising on the back of new hires and multiple acquisitions, but that its search-platform ads could help it weather the sluggishness in the advertising industry.

Write to Kwanwoo Jun at [e-mail]

(END) Dow Jones Newswires

October 04, 2022 03:42 ET (07:42 GMT)

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