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The RealReal Inc REAL

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Profit Progress Encourages, May Come at the Expense of Long-Term Market Share for The RealReal

Sean Dunlop

The luxury apparel resale space has been chronically underserved, with an inefficient network of brick-and-mortar boutiques capturing the bulk of sales over the last decade. The RealReal exists to serve this end market more efficiently, with white-glove inventory sourcing, faithful authentication protocols, and an online platform leading to step-change improvements in platform depth, turnover, and vibrancy. We view the company's strategy as relatively sound, and appreciate its efforts to restructure its looming 2025 debt to assuage bankruptcy concerns.

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Price vs Fair Value

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REAL is trading at a 475% premium.
Price
$3.25
Fair Value
$3.81
Uncertainty
Very High
1-Star Price
$1.73
5-Star Price
$8.54
Economic Moat
Ynln
Capital Allocation
Trnv

Bulls Say, Bears Say

Bulls

Partnerships with Stella McCartney, Burberry, and Gucci should bolster trust in The RealReal's authentication services, addressing a key pain-point in luxury e-commerce.

Bears

Growth in mobile commerce and younger luxury consumers may favor cheaper self-service marketplaces like eBay, Poshmark, or Mercari.

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Trading Information

Previous Close Price
—
Day Range
—–—
52-Week Range
—–—
Bid/Ask
— / —
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
—
Price/Sales
0.60
Dividend Yield (Trailing)
0.00%
Dividend Yield (Forward)
0.00%
Total Yield
—

Company Profile

The RealReal is the largest pure-play luxury resale platform in the us, generating $1.7 billion in 2023 gross merchandise volume and addressing a niche (personal luxury resale) that had previously been serviced by inefficient upscale boutiques and local pawn shops. The company generates revenue via consignment and first-party sales on its online marketplace, and through a small volume of direct sales. With a hands-on approach that actively sources inventory and authenticates every item on its platform, The RealReal is able to justify much higher take rates than peers, working out to roughly 34% of net merchandise value, which excludes returns, cancellations, and first-party sales.
Sector
Consumer Cyclical
Industry
Luxury Goods
Stock Style Box
Small Value
Total Number of Employees
3,032
Website
https://www.therealreal.com

Competitors

Valuation

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Metric
REAL
JWN
RVLV
Price/Earnings (Normalized)
 —11.5046.21
Price/Book Value
 —3.834.36
Price/Sales
 0.600.251.69
Price/Cash Flow
 25.793.3446.84
Price/Earnings
REAL
JWN
RVLV

Financial Strength

Metric
REAL
JWN
RVLV
Quick Ratio
 0.790.301.22
Current Ratio
 0.981.072.65
Interest Coverage
 −5.793.23—
Quick Ratio
REAL
JWN
RVLV

Profitability

Metric
REAL
JWN
RVLV
Return on Assets (Normalized)
 −10.97%3.61%6.06%
Return on Equity (Normalized)
 —38.86%9.70%
Return on Invested Capital (Normalized)
 −16.40%7.51%8.76%
Return on Assets
REAL
JWN
RVLV

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