• ThredUp is scaling the logistics backbone of secondhand apparel.
• The company operates a full-service resale platform and powers branded programs for global retailers.
• A regulatory shift ending duty-free fast-fashion imports has undercut rivals like Shein and Temu.
• ThredUp’s shares appear well-positioned — with revenue growing, adjusted EBITDA turning positive and momentum building in the consumer and B2B channels.

ThredUp (TDUP) is finally catching a break after years of razor-thin margins, punishingly high customer acquisition costs and relentless fast-fashion competition. Stock in the US-based online resale pioneer is up 400% in the last 12 months, partly because it doesn’t have to deal with the tariffs forcing Asia-based privately held rivals like Shein and Temu to raise prices.

The result? A company once dismissed as a cash-burning e-commerce experiment is now displaying real operational momentum, enjoying a surge in customers and wielding unexpected pricing power. Add in rising consumer demand for sustainability and affordability, and ThredUp isn’t just surviving in the resale market — it’s beginning to thrive.

ThredUp finds edge in a shifting market

ThredUp is quietly becoming a foundational player in the evolving secondhand apparel industry, bringing scale, infrastructure and tech-enabled logistics to a sector long dominated by fragmented, peer-to-peer resellers. Unlike competitors Poshmark (POSH) or Mercari (MCARY), ThredUp operates as a full-service managed marketplace. Sellers send in clothing using “Clean Out Kits,” and ThredUp takes over from there — inspecting, photographing, listing, pricing, warehousing  and shipping the merchandise. 

The process is capital-intensive but creates a defensible moat built on automation, logistics scale and proprietary data. Moreover, ThredUp’s growing Resale-as-a-Service (RaaS) platform extends to global retailers like Walmart, Madewell and The Gap, enabling them to plug into branded resale without building the infrastructure themselves. And recently, a key regulatory shift may has also tipped the scales in ThredUp’s favor. 

In May, the United States officially closed the de minimis loophole, ending the ability of companies like Shein and Temu to ship sub-$800 packages to here consumers duty-free. For fast-fashion rivals that built empires on rock-bottom pricing, the move was a body blow, forcing price hikes and damaging competitiveness. In contrast, ThredUp’s operations are US-based and largely unaffected by the new tariffs. As a result, the company suddenly found itself with a regulatory tailwind that dulls the edge of its fiercest competitors because Temu and Shein have reportedly scaled back on digital marketing efforts. But the opportunity may be fleeting. If tariffs are reversed, ThredUp could lose some of its newfound pricing advantage.

However, the positives don’t end there. Last month, ThredUp made its RaaS platform free and open-source, aiming to become the default infrastructure layer for branded resale. It also announced plans to launch a new peer-to-peer platform before year-end, expanding its customer base and introducing menswear into the mix. Meanwhile, tech-forward features like its AI-powered “style chat” and image search are showing early traction with younger consumers. These moves reflect a broader strategy shift—away from pure growth at any cost, and instead toward building a sticky, scalable system.

In many ways, ThredUp is in the midst of a strategic inflection. It has a defensible infrastructure, a regulatory windfall and growing institutional credibility. But the company still must turn strong gross margins into positive free cash flow. If it can pull that off, especially in a market increasingly focused on affordability and sustainability, the company’s valuation will assuredly benefit. 

A turning point in the numbers

For years, ThredUp was seen as just another money-losing e-commerce experiment. But in Q1, the company appears to have flipped the script. Revenue hit a record $71 million, up 10.5% year-over-year, powered by a 95% surge in new buyers and a steady rise in active users. Gross profit climbed to $56 million, with margins still a solid 79%—a slight dip, but one tied to strategic promotions aimed at fueling growth.

The real surprise came below the line. Adjusted EBITDA reached $3.8 million — or 5.3% of revenue — more than doubling the margin from a year ago, while net losses shrank by nearly 70% to $5.2 million. Even free cash flow turned positive at $3.9 million, boosting the company’s cash pile to $55.4 million. For a business long defined by burn, it’s a meaningful shift. These improvements suggest a business slowly learning to operate within its means.  

Marketing expense remains a necessary evil, but management noted improved payback periods and more favorable customer acquisition costs, aided in part by the ad pullback from rivals like Shein and Temu. While average revenue per order declined by about 5% (because of first-time buyer incentives), this was viewed as a short-term tradeoff to fuel longer-term growth. Encouragingly, 60% of gross profit came from premium merchandise, signaling ThredUp’s product mix is improving as it scales.

Management also raised guidance on both the top and bottom lines. For Q2, revenue is projected at $72.5 million–$74.5 million — up 10% year-over-year (YoY) at the midpoint) — and for the full year, the company now expects $281 million–$291 million in revenue, alongside an adjusted EBITDA margin of 4.0%. Gross margin is expected to hold steady between 77%–79%, and management reaffirmed its target of free cash flow positivity across the year. On the Q1 earnings call, Chief Financial Officer Sean Sobers confirmed Q3 will likely be the high point of the year in revenue, while EBITDA could dip slightly as the company ramps up investments to maintain momentum.

Still, the path to sustained profitability won’t be easy. ThredUp faces high fixed costs, labor-intensive operations and ongoing dependence on performance marketing — all of which leave it vulnerable to macro and margin pressure. Gross margins remain strong, but the real test is operating leverage: Can the company turn scale into durable profits while still growing? The latest results suggest it’s possible but far from certain.

For now, the numbers point to a company that’s stabilizing, not sprinting. But after years of operational setbacks and investor skepticism, even stability can be a welcome development. If ThredUp can maintain the momentum while continuing to refine its product offerings, marketing efficiency and RaaS monetization, the foundation for long-term profitability may finally be taking shape.

When a retail story becomes a macro play

ThredUp’s turnaround story is resonating and the market has taken notice. The stock is up over 400% in the past year, fueled by tariff tailwinds, improved execution and a wave of investor interest in sustainability-focused growth. Its soaring valuation now reflects more than just a comeback. It signals a growing conviction that ThredUp could become a defining force in the resale economy.

Priced at roughly $8.50 per share, ThredUp trades with a price-to-sales ratio of 3.4, well above the sector median of 0.9. Likewise, its price-to-book ratio stands at a staggering 17, compared to a peer average of just two. On an absolute basis, these multiples are difficult to justify for a company that remains unprofitable, with limited pricing power and a high-cost operating model. On a relative basis, these numbers suggest investors are already pricing in years of successful execution and perhaps even a wide moat that has yet to materialize.

But ThredUp isn’t conventional retailer and its model isn’t easy to copy. The company’s Resale-as-a-Service platform is gaining traction, and recent earnings suggest it’s finally unlocking operating leverage. Adding to that, a key macro lever shifted in 2025: Tariffs. With the US closing the de minimis loophole, fast-fashion giants like Shein and Temu have lost their pricing edge, removing a long-standing drag on ThredUp’s value proposition. If these import restrictions hold, ThredUp stands to benefit as a more cost-competitive, regulation-insulated alternative to new apparel.

Analyst sentiment remains cautiously optimistic. Three out of four rate ThredUp a “buy” or “overweight,” with an average price target of $7.25, just below current levels. In our view, Wall Street may be underestimating the upside from operating scale and the durability of regulatory tailwinds. Given the company’s trajectory, we take a different stance. We view the stock as a ‘buy,” not because the company’s flawlessly run or undervalued, but because it’s strategically positioned at the intersection of affordability, sustainability and policy-driven disruption.

ThredUp offers investors pure-play exposure to the growing resale economy, backed by multiple advantages that, if sustained, could more than justify its current premium. Risks remain, especially around marketing efficiency and margin pressure, but with improving fundamentals, strategic flexibility and favorable macro dynamics, the ThredUp story stands out as a compelling narrative. 

Investment takeaways

ThredUp may not dominate headlines, but it’s carving out a defensible niche in a fast-changing branch of retailing. With record buyer growth, improving operating leverage and a logistics moat through its Resale-as-a-Service platform, the company is gaining credibility as more than just an online thrift shop. Layer in a timely regulatory shift that weakens fast-fashion giants like Shein and Temu, and suddenly ThredUp’s economics look far more favorable.

The stock isn’t without risks. Tariffs have been a tailwind, but if trade policy shifts unfavorably ThredUp could face renewed pricing pressure. Still, its resilience doesn’t depend on tariffs alone. In a weak economy, consumers often turn to resale out of necessity, not just preference, making ThredUp a potential recession winner instead of a casualty. Coupled with long-term sustainability trends, it’s well-positioned for continued relevance.

Taking the full picture into account, we rate ThredUp shares a buy, particularly for investors looking to capitalize on shifting consumer behavior toward affordability, sustainability and the growing appeal of secondhand retail. The company still has executional hurdles to clear., But if it can stay focused on cost discipline and scale its platform wisely, the long-term payoff could be substantial.

Andrew Prochnow, Luckbox analyst-at-large, has traded the global financial markets for more than 15 years, including 10 years as a professional options trader.

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