Tariffs have thrown the stock market off balance. Literally several times a day, sometimes hour-to-hour, stocks soar on rumors of a resolution to President Trump’s tariff hikes only to crater again when cold water is thrown on them.
Yet one stock has been oblivious to the market’s drunken stagger lower. Its shares have tripled in 2025, rising 202% and looking like they could go higher. Particularly because Trump has said it could take two to three years to resolve the U.S.’s trade issues with China, it’s possible this company will thrive under a high-tariff regime.
Having come so far, so fast, should investors buy in?
Fighting Against Cheap Imports
ThredUp (TDUP) is an online resale platform where consumers can buy and sell used clothes, shoes, handbags, and other accessories. It pushes an environmentally friendly ethos of reusing rather than throwing away, and uses technology to improve the customer experience.
Because it has made the process of buying and selling secondhand merchandise easy, it has become one of the largest resale platforms. Yet imports of cheap, Chinese-made apparel is a threat to its business.
If you ever wondered why ads for Chinese knockoff websites Temu or Shein appear everywhere, it’s because they can skirt tariffs by using an underappreciated rule called the de minimis exemption. It allows packages valued at under $800 to enter the U.S. without being subject to import duties.
Temu, Shein, and Alibaba (BABA) have exploited the loophole and flooded U.S. markets with cheap imports, particularly fast-fashion apparel. President Trump just shut the door on the exemption. Beginning May 2, items under $800 will now face tariffs of 30% of their value or $25, whichever is greater, and it will rise to $50 on June 1.
This could boost the market for secondhand goods, and for ThredUp. With TDUP scheduled to report earnings on May 5, should investors buy now?
A Money-Losing Business
A public company since 2021, ThredUp has been a disaster to own. TDUP stock has lost 79% of its value and it remains a money-losing operation. Wall Street is forecasting a 15% decline in sales for the first quarter of 2025 to $67.5 million, with a 5.5% increase to $274.2 million for the full year. Q1 losses of $0.06 per share are anticipated with full-year losses of $0.15 predicted.
ThredUp is suffering from declining numbers of active buyers on its site leading to fewer orders being placed. At the end of 2023 it had 1.797 million active buyers on its site, but at the end of 2024, it had just 1.274 million. Orders for the full year fell 1% to 4.8 million.
The resale platform should benefit from closing the de minimis loophole as prices rise and shipping times lengthen. Schein, for example, is raising prices as much as 377% because of tariffs.
Key Takeaway
Although ThredUp can gain from the situation, it’s not likely to turn into a profitable business any time soon. Because it has been burning cash for so long, the run-up in shares so far may be as good as it gets.
I’d hold off on buying TDUP stock till at least after the earnings report because any benefit it does derive may take a while to materialize.
