Optimist Fund's Investment Thesis for ThredUp (TDUP) is Paying Off

Optimist Fund, an investment management company, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The quarter was characterized by the Optimist Fund’s strongest quarter of investment performance since its inception. The results proved the firm was true to its strategy, investing in underappreciated, market-leading businesses led by ambitious CEOs with long runways for growth. The fund returned 39.2% in Q2 compared to 11.3% for its benchmark. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, Optimist Fund highlighted stocks such as ThredUp Inc. (NASDAQ:TDUP). ThredUp Inc. (NASDAQ:TDUP) is an online resale platform that helps consumers buy and sell primarily secondhand apparel, shoes, and accessories. The one-month return of ThredUp Inc. (NASDAQ:TDUP) was 1.98%, and its shares gained 1,062.54% of their value over the last 52 weeks. On September 15, 2025, ThredUp Inc. (NASDAQ:TDUP) stock closed at $10.80 per share, with a market capitalization of $1.33 billion.

Optimist Fund stated the following regarding ThredUp Inc. (NASDAQ:TDUP) in its second quarter 2025 investor letter:

"As we noted in our Q1 letter, ThredUp Inc. (NASDAQ:TDUP) is undergoing a significant inflection point that’s rapidly shifting investor perception of the business. The company delivered strong Q1 results, beating expectations and raising guidance for Q2 and the full year. While the stock has already had a strong run year-to-date, we continue to see meaningful upside over the coming years as ThredUp scales into its existing fulfillment center capacity."

ThredUp Inc. (NASDAQ:TDUP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 25 hedge fund portfolios held ThredUp Inc. (NASDAQ:TDUP) at the end of the second quarter, compared to 13 in the previous quarter. In the second quarter of 2025, ThredUp Inc.'s (NASDAQ:TDUP) revenue growth accelerated to 16.4% year-over-year to $77.7 million. While we acknowledge the potential of ThredUp Inc. (NASDAQ:TDUP) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered ThredUp Inc. (NASDAQ:TDUP) and shared the list of must-buy small-cap stocks to invest in. In its Q4 2024, investor letter Optimist Fund highlighted ThredUp Inc. (NASDAQ:TDUP) as a compelling asymmetric investment opportunity. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.