RealReal以陷阱和前景庆祝IPO 5周年

Five years ago today, The RealReal (NASDAQ:REAL) became a publicly-traded company, selling 15M shares at a price of $20 per share. The stock debuted on the Nasdaq exchange at $28 per share, raising $300M and putting the value of the secondhand luxury retailer at ~$2.5B.

Using a unique business model of providing a marketplace for buyers and sellers to acquire secondhand designer and luxury items at reduced prices, the company was developed to be primarily an online marketplace but expanded into brick and mortar stores in 2017 with its first NYC location. It would later expand its footprint to 15 stores located in Connecticut, California, Florida, and Texas.

The model of selling authenticated designer goods might have lured in investors early on, but the company was plagued by claims of counterfeit goods being sold to unsuspecting consumers. Just five months from going public, investors sued the company claiming it misrepresented its authentication process in its IPO offering, leaving the company exposed to lawsuits that could damage shareholders’ investment. The company settled for $11M.

The first 2 years of the company’s public life were riddled with setbacks. The stock retreated from the IPO high of $28 per share, down to as little as $4 per share before its first anniversary. The pandemic led the company to withdraw its guidance as California’s shelter directive forced the closure of many of its retail locations in the state, as well as its e-commerce locations.

In the following years, the stock recovered to $30 per share but began losing ground throughout 2021 as competitors (RENT, TDUP) entered the market and the company struggled to earn a profit.  By mid-2022, the stock had surrendered almost 90% of its value from the $30.22 high in Feb 2021.

Despite the dismal performance of the stock, The RealReal (REAL) remained an analyst darling with Wall Street firms cheering for the stock from the sidelines, forecasting a recovery back to $30 and profitability in the cards for 2022. With inflationary pressures building, the company’s CEO extolled the virtue of the company as an attractive alternative for price sensitive consumers. But investors weren’t buying it and continued to punish the company for its inability to earn a profit and lingering macro challenges.

In 2022, Julie Wainwright stepped down as CEO and chairman from the company she founded. Although Wainwright said it was time for a new generation to lead the company, her resignation came as the company’s valuation was circling the drain below $300M. Inflation and shifting consumer spending continued to plague the company while Wall Street analysts threw in the towel and downgraded the stock.

New CEO John Koryl sharpened The RealReal’s (REAL) focus on consignment and wound down its direct business and eliminated its beauty products category. The company also cut its workforce by 7% and reduced its footprint with the closure of 4 stores and 2 consignment offices.

Talk of a takeover breathed new life into the stock at the start of this year, doubling the price of the stock in three months to $4.64 per share. Although still unable to earn a profit, a new CEO and CFO rekindled expectations that the company was on the path to profitability, while buyout speculation lured in heavyweight investors.

In its latest quarterly report, a profit remained elusive, but its loss narrowed to $0.12 per share from a loss of $0.36 year-over-year as the company’s decision to focus on consignment sales over direct sales contributed to improved profitability.

“With positive [gross merchandise value] growth metrics plus a rapidly expanding gross margin, The RealReal seems to have found the proverbial light at the end of the tunnel,” Seeking Alpha investor Gary Alexander says, adding that, “although macro risks still remain, I’d say the RealReal at ~1xFY25 is trading cheaply enough to warrant a small position.” 

More on The RealReal

• RealReal: Return To GMV Growth May Spark The Beginning Of A Rebound
• The RealReal, Inc. (REAL) Q1 2024 Earnings Call Transcript
• The RealReal: Turnaround Plan Deserves A Vote Of Confidence
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• The RealReal Non-GAAP EPS of -$0.12 beats by $0.03, revenue of $143.8M beats by $4.57M