What Happened:
Shares of secondhand luxury marketplace The RealReal (NASDAQ: REAL) jumped 8.7% in the morning session after a report that the company is on the radar of private equity suitors for a possible acquisition. Earlier this year, the company presented a new savings plan to reduce operating expenses, including downsizing staff and optimizing its real estate footprint. In line with this plan, The RealReal will lay off around 230 workers, representing around 7% of its workforce. After the initial pop the shares cooled down to $1.14.
What is the market telling us:
The RealReal's shares are very volatile and over the last year have had 122 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The RealReal is up 5.05% since the beginning of the year, but at $1.14 per share it is still trading 82.1% below its 52-week high of $6.37 from April 2022. Investors who bought $1,000 worth of The RealReal's shares at the IPO in June 2019 would now be looking at an investment worth $39.62.
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