TDUP - ThredUp stock surges over 60% post-earnings

2023-03-07 11:19:15 ET

ThredUp ( NASDAQ: TDUP ) stock soared on Tuesday after analysts applauded the company’s Q4 earnings results.

The Oakland-based e-commerce company posted a beat on top and bottom lines for the quarter and forecast continued improvement into 2023. Management forecast better than expected revenue for the full-year while charting a potential path to profitability in the second half of the year.

“While they're not out of the woods yet, we'd assume that they have visibility into Q1 (since we're 10 weeks in), so the implied improvement in YoY growth relative to Q4 (when normalizing for the breakage benefit) is encouraging,” Wedbush analyst Tom Nikic wrote in a review of the results. “With easier compares ahead and macro pressure potentially easing, TDUP could see a strong reacceleration of top-line trends, and we remain encouraged by their confidence in the path to profitability.”

He told clients that the “risk/reward is highly skewed to the upside” with momentum likely to build on the back of these results. Nikic rated the stock at Outperform and assigned a $3 price target, suggesting continued upside to shares even after Tuesday’s pop.

Nikic was joined in bullishness by analysts at Raymond James, Needham Securities, and Wells Fargo all of whom assigned the stock a Buy-equivalent rating. Needham analyst Anna Andreeva assigned the Street high target of $5.

“We think it's too early to call for consumer demand stabilization, but TDUP is controlling the controllables, with unit economics improving and better automation driving profitability gains,” she concluded.

That said, there remained a modicum of caution among many analysts. For example, Keybanc maintained a Hold-equivalent, remaining cautious on company execution.

“TDUP noted cautious optimism regarding a more predictable budget consumer, with FY23 guidance pointing to meaningful improvement in 2H23,” Keybanc analyst Noah Zatkin acknowledged. “We are encouraged by management's focus on positive free cash flow via achieving breakeven quarterly adjusted EBITDA in the back half of 2023 along with substantially lower capex requirements but remain Sector Weight awaiting further signs of execution on plan amid a challenging macro environment.”

Shares of ThredUp ( TDUP ) ripped 61.71% higher on Tuesday as trading volume trended toward 3000% of the daily average. Short interest in ThredUp stands at just over 8%, according to Seeking Alpha data.

Read more on the details of earnings results .

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