The WACC of Poshmark Inc (POSH) is 6.7%.
Range | Selected | |
Cost of equity | 7.5% - 9.4% | 8.45% |
Tax rate | 0.5% - 0.6% | 0.55% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.2% - 7.2% | 6.7% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.79 | 0.81 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.5% | 9.4% |
Tax rate | 0.5% | 0.6% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.2% | 7.2% |
Selected WACC | 6.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
POSH | Poshmark Inc | 1 | 1.02 | 0.51 |
DLTH | Duluth Holdings Inc | 0.74 | 0.64 | 0.37 |
EBAY | eBay Inc | 0.21 | 0.42 | 0.35 |
ETSY | ETSY Inc | 0.42 | 0.5 | 0.35 |
FOOD.TO | Goodfood Market Corp | 4.17 | 1.53 | 0.3 |
HEWA | HealthWarehouse.com Inc | 0.52 | -0.11 | -0.07 |
LITB | LightInTheBox Holding Co Ltd | 0.03 | -1.51 | -1.46 |
PRTS | Carparts.Com Inc | 0.28 | 0.59 | 0.46 |
PTS.TO | Points International Ltd | 0 | 1.62 | 1.62 |
REAL | RealReal Inc | 0.73 | 1.86 | 1.08 |
WNW | Wunong Net Technology Co Ltd | 1.02 | 0.67 | 0.33 |
Low | High | |
Unlevered beta | 0.35 | 0.37 |
Relevered beta | 0.69 | 0.72 |
Adjusted relevered beta | 0.79 | 0.81 |
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 (8.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.79) + 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.