What Happened:
Shares of secondhand luxury marketplace The RealReal (NASDAQ: REAL) fell 6.06% in the after-market session after the company reported first-quarter results that missed analysts' revenue estimates, though adjusted EBITDA and EPS beat. However, revenue guidance for the next quarter and the full year came in below Consensus. Also, the cash burn increased, and revenue growth remained weak. On a brighter note, full year adj. EBITDA guidance came in ahead of estimates. Despite the improved profitability outlook, it was a mixed quarter for the company.
What is the market telling us:
The RealReal's shares are very volatile and over the last year have had 121 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 previous big move was 15 days ago, when the company gained 8.7% on the news that 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.
The RealReal is up 20.2% since the beginning of the year, but at $1.31 per share it is still trading 70.3% below its 52-week high of $4.41 from May 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 $45.33.
Is now the time to buy The RealReal? Access our full analysis of the earnings results here, it's free.