The RealReal Inc is a luxury consignment platform that specializes in the resale of authenticated high-end fashion items, including designer clothing, accessories, and jewelry
The company connects buyers and sellers in a marketplace that emphasizes sustainability and the circular economy, allowing consumers to buy pre-owned luxury goods at reduced prices while enabling sellers to earn money from their unused items. By employing a team of experts who authenticate and appraise merchandise, The RealReal ensures the quality and authenticity of its offerings, creating a trusted environment for both buyers and sellers in the luxury resale market.
Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings.
However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
Shares of secondhand luxury marketplace The RealReal (NASDAQREAL)
fell 17.7% in the afternoon session after the company reported underwhelming fourth-quarter 2024 results: its full-year EBITDA guidance missed significantly, and its number of active buyers fell slightly short of Wall Street's estimates. Revenue grew 14% year on year, fueled by a 12% increase in gross merchandise value (GMV), however, it barely scaled past Wall Street's estimates, evoking no excitement.
Despite the growth concerns, profits improved. However, it's not clear if the momentum can be sustained as the company guided for full-year 2025 EBITDA between $20 million and $30 million, a shortfall compared to analysts' expectations. First-quarter revenue guidance also suggests a potential slowdown from the strong holiday-driven Q4.
While RealReal continues to make progress toward profitability, the weaker revenue outlook and slightly disappointing buyer growth raise questions.
Secondhand luxury marketplace The RealReal (NASDAQREAL) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 14.4% year on year to $164 million. The company expects next quarter’s revenue to be around $159 million, close to analysts’ estimates. Its non-GAAP loss of $0.01 per share was in line with analysts’ consensus estimates.
As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the online marketplace industry, including eHealth (NASDAQEHTH) and its peers.
What a time it’s been for The RealReal. In the past six months alone, the company’s stock price has increased by a massive 189%, reaching $9.36 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Shares of secondhand luxury marketplace The RealReal (NASDAQREAL)
jumped 39.4% in the morning session after a Wells Fargo analyst upgraded the stock's rating from Equal Weight (Hold) to Overweight (Buy) and bumped the price target from $4 to $15. The analyst credited the upgrade to the company's improved focus on profits under new leadership. Key factors driving the change included higher profit margins from a revamped consignment fee structure and less dependence on low-margin direct sales. The analyst thinks the recent debt overhaul also lowered financial risks, setting the stage for the company to generate positive free cash flow by 2025.
Looking back on online marketplace stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including The RealReal (NASDAQREAL) and its peers.
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