RealReal (REAL) AI Stock Analysis

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RealReal

(NASDAQ:REAL)

50Neutral

RealReal's overall stock score reflects significant financial challenges, marked by high debt and negative cash flows, which are partially offset by a positive earnings call highlighting growth and strategic efficiencies. Technical analysis and valuation metrics suggest caution, but the company's proactive strategies offer potential for improvement.

Positive Factors

AI and Technology

AI advancements in authentication, photography, pricing, and cataloguing are expected to help reduce lead times and increase profitability.

Debt Management

REAL has strengthened its balance sheet by reducing total debt and pushing out maturity risk to 2028 and beyond.

Revenue Growth

REAL released a positive preliminary 4Q/FY update well ahead of Street expectations on both revenues and adjusted EBITDA.

Negative Factors

Earnings Expectations

1Q results were only in line and their FY plan was only reiterated, viewed as a 'good...not great, print.'

Share Dilution

Existing shareholders will be diluted by ~9% should the 2031 Notes rise above the conversion price.

RealReal (REAL) vs. S&P 500 (SPY)

Market Cap

$619.76M

Dividend YieldN/A

Average Volume (3M)3.77M

Price to Earnings (P/E)―

Beta (1Y)2.48

Revenue Growth11.89%

EPS Growth66.22%

CountryUS

Employees3,011

SectorConsumer Cyclical

Sector Strength73

IndustryLuxury Goods

Share Statistics

EPS (TTM)-0.08

Shares Outstanding113,095,330

10 Day Avg. Volume5,796,896

30 Day Avg. Volume3,766,111

Financial Highlights & Ratios

PEG Ratio0.87

Price to Book (P/B)-1.37

Price to Sales (P/S)0.00

P/FCF Ratio-128.78

Enterprise Value/Market Cap1.53

Enterprise Value/Revenue0.41

Enterprise Value/Gross Profit2.19

Enterprise Value/Ebitda-5.23

Forecast

1Y Price Target

$10.38

Price Target Upside89.42% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

RealReal Business Overview & Revenue Model

Company DescriptionThe RealReal, Inc. (REAL) is a leading online and brick-and-mortar marketplace for authenticated luxury consignment. The company operates primarily in the retail and e-commerce sectors, providing a trusted platform for buying and selling pre-owned luxury goods, including clothing, fine jewelry, watches, fine art, and home decor. It is renowned for its rigorous authentication process, ensuring that every item sold is genuine, which has cemented its reputation as a reliable destination for luxury consignment.

How the Company Makes MoneyThe RealReal makes money through a consignment model where it takes a commission on each item sold. Sellers send their luxury goods to The RealReal, where the items are authenticated, photographed, and listed for sale on their online platform and in physical retail locations. When an item is sold, the company retains a percentage of the sale price as a commission, which varies based on the item's price and category. Additional revenue streams include fees for premium services, such as white-glove pickup services for consignors, and potential partnerships with luxury brands that can offer exclusive collaborations or events. The company's earnings are significantly influenced by the quality and quantity of items consigned, the efficiency of their authentication process, and their ability to attract both buyers and sellers to the platform.

RealReal Financial Statement Overview

Summary

RealReal is showing signs of revenue growth and improvements in cash flow, but it remains challenged by high debt levels and persistent losses. The negative equity position and leverage pose significant risks, and the company needs to focus on improving profitability and strengthening its financial position to ensure long-term viability.

Income Statement

Neutral

RealReal has shown some revenue growth with a 2024 revenue of $600.5 million up from $549.3 million in 2023. However, the company struggles with profitability, posting a negative EBIT and net income. Gross profit margin is healthy at 74.5% for 2024, but the net profit margin remains deeply negative at -22.3%. Overall, while there is revenue growth, the persistent losses suggest challenges in achieving profitability.

Balance Sheet

Negative

The balance sheet indicates significant leverage with a debt-to-equity ratio that is not calculable due to negative equity, compounded by negative stockholders' equity of -$407.4 million in 2024. The equity ratio is also negative, reflecting financial instability. The company's high debt levels compared to assets and negative equity highlight potential solvency risks.

Cash Flow

Neutral

Cash flow analysis shows improvement with positive operating cash flow of $26.8 million in 2024 compared to negative $61.3 million in 2023. Free cash flow also turned positive in 2024 at $12.6 million, which is a promising sign. However, the company's cash flow to net income ratios are not favorable due to negative net income, indicating potential sustainability issues.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
600.48M	549.30M	603.49M	467.69M	298.27M
	Gross Profit
447.52M	376.28M	348.69M	273.48M	185.88M
	EBIT
-56.49M	-166.29M	-188.71M	-201.52M	-174.50M
	EBITDA
-64.25M	-109.05M	-138.53M	-171.55M	-135.56M
	Net Income Common Stockholders
-134.20M	-168.47M	-196.44M	-236.11M	-177.51M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
172.21M	175.71M	293.79M	418.17M	354.86M
	Total Assets
423.10M	446.92M	615.64M	754.94M	605.11M
	Total Debt
546.55M	577.37M	595.74M	509.79M	279.27M
	Net Debt
374.34M	401.66M	301.95M	91.62M	-71.58M
	Total Liabilities
830.47M	750.22M	785.73M	681.82M	413.82M
	Stockholders Equity
-407.38M	-303.30M	-170.09M	73.13M	191.29M
Cash Flow		Free Cash Flow
798.00K	-103.40M	-128.48M	-189.59M	-161.35M
	Operating Cash Flow
26.85M	-61.27M	-91.56M	-142.15M	-132.76M
	Investing Cash Flow
-25.59M	-42.13M	-36.92M	-43.44M	176.35M
	Financing Cash Flow
-4.76M	226.00K	4.10M	252.91M	152.81M

RealReal Technical Analysis

Technical Analysis Sentiment

Negative

Last Price5.48

Price Trends

50DMA

5.73

Negative

100DMA

7.18

Negative

200DMA

5.51

Negative

Market Momentum

MACD

-0.03

Positive

RSI

43.50

Neutral

STOCH

24.06

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For REAL, the sentiment is Negative. The current price of 5.48 is below the 20-day moving average (MA) of 5.95, below the 50-day MA of 5.73, and below the 200-day MA of 5.51, indicating a bearish trend. The MACD of -0.03 indicates Positive momentum. The RSI at 43.50 is Neutral, neither overbought nor oversold. The STOCH value of 24.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for REAL.

RealReal Risk Analysis

RealReal disclosed 57 risk factors in its most recent earnings report. RealReal reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

RealReal Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MOV	71 Outperform	$273.76M	21.03	3.95%	8.19%	-8.69%	-57.84%
SIG	63 Neutral	$2.86B	5.56	2.62%	1.77%	-6.52%	-104.24%
Sector *	61 Neutral	$6.99B	11.27	2.81%	3.90%	2.61%	-21.77%
LUXE	59 Neutral	$862.89M	―	-8.75%	―	7.08%	-42.22%
BRLT	54 Neutral	$148.97M	―	-0.45%	―	-6.12%	-105.56%
REAL	50 Neutral	$619.76M	―	32.94%	―	11.89%	66.22%
LANV	44 Neutral	$332.67M	―	-195.94%	―	-22.86%	-38.76%

* Consumer Cyclical Sector Average

Performance Comparison

REAL

RealReal

5.48

1.31

31.41%

MOV

Movado Group

17.35

-8.17

-32.01%

SIG

Signet Jewelers

66.22

-30.98

-31.87%

LUXE

Luxexperience B.V.

9.54

4.54

90.80%

LANV

Lanvin Group Holdings

2.16

0.54

33.33%

BRLT

Brilliant Earth Group

1.35

-1.03

-43.28%

RealReal Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: -24.83%|

Next Earnings Date:Aug 12, 2025

Earnings Call Sentiment Positive

The earnings call presents a positive outlook for the RealReal with strong revenue growth and profitability improvements, driven by strategic initiatives and operational efficiencies. Despite some challenges with operating cash flow and macroeconomic uncertainties, the highlights significantly outweigh the lowlights, indicating a successful start to the year.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

In Q1 2025, GMV increased by 9% and revenue increased by 11% year-over-year, aligning with the company's goal of high-single-digit to low-double-digit growth. Active buyers also increased by 7% on a trailing 12-month basis.

Improved Profitability and Margins

Adjusted EBITDA increased to a positive $4 million, an increase of $6 million versus Q1 of last year. Gross margin improved by 40 basis points year-over-year.

New Consignor Growth

The company delivered its highest number of new consignors in over two years, with innovative strategies contributing significantly to new consignor acquisition.

Successful Strategic Initiatives

The growth playbook initiatives, including sales, marketing, and stores, drove healthy supply trends. The Real Partners and Get Paid Now programs are generating substantial supply growth.

Operational Efficiency with AI

The Athena AI-enabled product intake process reduces costs and improves efficiency, processing more than 10% of items with an estimated 20% reduction in processing times.

Negative Updates

Operating Cash Flow Challenges

Operating cash flow for the first quarter was negative $28 million due to the timing of incentive payments and working capital seasonality.

Potential Macroeconomic Challenges

Acknowledgment of potential challenges arising from a more uncertain macroeconomic environment, although the company maintains a balanced perspective.

Company Guidance

During the call, the RealReal reaffirmed its full-year 2025 guidance and reported strong Q1 results, with GMV increasing by 9% to $490 million and revenue up 11% year-over-year to $160 million. The company achieved a 7% increase in active buyers, and the average order value rose by 5% to $564. Gross margin improved by 40 basis points to 75%, and adjusted EBITDA reached a positive $4 million, marking a $6 million increase from the previous year. The RealReal highlighted its strategic pillars of unlocking supply, driving operational efficiencies, and enhancing service, which contributed to the highest number of new consignors in over two years. The company expects full-year GMV between $1.96 billion and $1.99 billion and revenue between $645 million and $660 million, with adjusted EBITDA projected to be between $20 million and $30 million.

RealReal Corporate Events

Private Placements and FinancingFinancial Disclosures

RealReal Finalizes Debt Exchange Agreement for 2025

Positive

Feb 10, 2025

On February 10, 2025, The RealReal, Inc. finalized a debt exchange agreement reducing its total indebtedness by $37 million by exchanging $183 million of 1.00% Convertible Senior Notes due 2028 for $147 million of new 4.00% Convertible Senior Notes due 2031. This strategic move strengthens the company’s financial position and capital structure. The company also reported strong preliminary financial results for the fourth quarter and full year 2024, exceeding previous guidance ranges for Gross Merchandise Value (GMV) and Adjusted EBITDA, signaling an important inflection point towards profitable growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.