Why The RealReal (REAL) Stock Is Up Today

Anthony Lee /
2023/11/08 9:26 am EST

What Happened:

Shares of secondhand luxury marketplace The RealReal (NASDAQ: REAL) jumped 6.7% in the pre-market session after the company reported third quarter results that exceeded analysts' GMV (Gross Merchandise Value) and revenue expectations, driven by higher-than-expected Average Order Values (Active Buyers and Number of Orders missed). Adjusted EBITDA also beat. On the other hand, revenue guidance for next quarter missed Wall Street's estimates. For the full year, GMV and revenue guidance was lowered, but Adjusted EBITDA was raised, signalling a more profitable business. Overall, it was a decent quarter.

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What is the market telling us:

The RealReal's shares are very volatile and over the last year have had 107 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 biggest move we wrote about over the last year was 7 months ago, when the stock 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 74.3% since the beginning of the year, but at $1.88 per share it is still trading 34% below its 52-week high of $2.85 from September 2023. 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 $65.75.

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