The RealReal Inc, Luxury At Value Prices
The RealReal, Inc (NASDAQ:REAL) is the operator of an online shopping portal for consignment and vendor-originated luxury items. Now, the luxury market was one of the worst-hit over the summer but the rebound is on and it is strong. Not only is this company leveraging eCommerce to full-effect, but it is also offering a value to consumers that they can’t get anywhere else.
The RealReal, Inc Business Rebound Accelerates
The Q3 results were still a bit weak in terms of YOY performance but the sequential results and quarter-to-date update show robust improvement and acceleration of business. Quickly touching base with the Q3 results, the $78.05 million in reported revenue is down about -4.3% from the previous year but up 36% sequentially with solid results reported for the first month of the 4th quarter.
The company’s November business update shows a 10% increase in YOY holiday-period orders (Black Friday and Cyber Monday) with a 3% increase in QTD orders. The number of new shoppers increased by 24% suggesting at least some of the increase in YOY business will stick long into the future. In terms of items sold, the number of Consignment items shipped increased by 51% versus the 48% increase clocked in October with Vendor items increasing by 121%. Not too shabby.
“We continue to make progress on our business recovery and were especially pleased with the record number of new and repeat buyers in November, the 24% Y/Y growth of new buyers in November, and the order volume momentum during the holiday shopping weekend … We remain focused on making the necessary strategic investments to drive the business forward during the pandemic and to position us for sustained, healthy growth in the years to come,” said Julie Wainwright, founder, and CEO.
The Analysts See A Real Opportunity In The RealReal
The analysts are bullish on The RealReal, Inc and have gotten more so in the weeks since the 3Q report. Not one but four analysts came out with positive notes including three rating initiations at a Buy or better. Piper Sandler initiated with an Overweight rating and a $19 price target citing an expected surge in gross merchandise volume as COVID-19 vaccinations lead to increased social gatherings. Sales volume will be enhanced by rebounding closet-clean-outs as well, and profitability may come sooner than expected.
Baird is the latest to issue a positive call on The RealReal, Inc. In their view, The RealReal, Inc is a compelling “open-ended growth story” with years and years of growth ahead of it. According to the note, Baird believes that near-term risks have been priced into the stock setting up an attractive risk/reward profile going into the spring and an expected vaccine-supported economic recovery. Baird issued a price target of $23 versus the $17.80 consensus and the Wall Street high target of $25.
The Technical Outlook: The RealReal, Inc Is In A Reversal Pattern
Shares of The RealReal, Inc have recovered all of the pandemic-inspired losses and more. The latest round of analysts upgrades has the stock moving higher, trading at a new 2020 high, and indicated higher. In the near-term, price action may continue to consolidate at the current levels, near $19.50/$20.00, but the longer-term outlook is much more bullish. The recent MACD peak is not only strong but convergent with the break out suggesting that further upside is on the way. The next target for strong resistance is near $24 or about 20% upside with a chance of reclaiming the post-IPO highs sometime in early 2021.
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