POSH WACC - Weighted Average Cost of Capital
The WACC of Poshmark Inc (POSH) is 6.9%.
| Range | Selected | |
| Cost of equity | 7.7% - 9.9% | 8.8% |
| Tax rate | 0.5% - 0.6% | 0.55% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.3% - 7.4% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.83 | 0.9 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.7% | 9.9% |
| Tax rate | 0.5% | 0.6% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.3% | 7.4% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| POSH | Poshmark Inc | 0.98 | 1.02 | 0.52 |
| DLTH | Duluth Holdings Inc | 0.86 | 0.7 | 0.37 |
| EBAY | eBay Inc | 0.23 | 0.45 | 0.37 |
| ETSY | ETSY Inc | 0.49 | 0.51 | 0.34 |
| FOOD.TO | Goodfood Market Corp | 4.33 | 1.61 | 0.3 |
| HEWA | HealthWarehouse.com Inc | 0.64 | -0.07 | -0.05 |
| ID | Parts Id Inc | 2 | 1.39 | 0.46 |
| PRTS | Carparts.Com Inc | 0.26 | 0.61 | 0.49 |
| PTS.TO | Points International Ltd | 0 | 1.62 | 1.62 |
| REAL | RealReal Inc | 0.77 | 1.77 | 1 |
| WNW | Wunong Net Technology Co Ltd | 1.03 | 0.82 | 0.4 |
| Low | High | |
| Unlevered beta | 0.37 | 0.46 |
| Relevered beta | 0.75 | 0.85 |
| Adjusted relevered beta | 0.83 | 0.9 |
POSH's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for POSH:
cost_of_equity (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.83) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.