How TheRealReal’s numbers stack up
TheRealReal (NASDAQ: REAL) is growing rapidly, but the stock is still falling substantially since its IPO. Is the market missing the opportunity here?
In this episode of “Upgrade or Topgrade”, recorded on 12 november, Millionacres editor-in-chief Deidre Woollard and Fool contributors Jeremy Bowman and Nick Rossolillo discuss the company’s recent earnings report and beyond.
Deidre Woollard: Now let’s see their numbers. They fell. Their stock is around, I think I just looked at that, around $ 16.40. They are down about 44% since the IPO, down 20% since the start of the year, but up slightly this week because earnings weren’t bad. The gross value of goods has increased by 50% year over year. Total revenue increased 53% to $ 119 million. Profit per order was up. But they still run with a net loss. One of the questions is, of course, when are they going to pay off? They are still trying to figure it out. They are more and more active buyers. They have 772,000 active buyers, which is a 25% increase. Their orders are up 38% year over year. Overall solid numbers, but this question of profitability is something they will be addressing. I think we see this in a lot of companies. I don’t know if you think this is a problem or not.
Jérémy Bowman: I also think I wanted to point out that it looks like RealReal has seen their revenue drop over the last year. They are experiencing a recovery.
Deidre Woollard: Yes, they have declined a bit, but they also feel very strong for the future.
Nicolas Rossolillo: I noticed, Deidre, on the bottom line: it’s not that they couldn’t be profitable, I don’t think so, because last year they had a positive bottom line, did am I reading well?
Deidre Woollard: Yeah, I think it’s okay. Another thing they are doing, I wanted to talk a little bit about this trial. I don’t know if either of you saw this, but I think it’s quite interesting. A lawsuit was filed in 2019 over their authentication requests and whether what the website said about how they authenticate themselves was really how they authenticate themselves. They just struck a deal for $ 11 million in cash. For a trial, it’s actually not too bad. It does sound like good news to me. [laughs] They are moving away from that, but it might be a concern in the future when it comes to authentication. It’s something to keep in mind, but they’re moving their authentication operations center from Brisbane, California, which looks like the San Francisco area, to Phoenix, Arizona. This is, I think, great news because it’s so much cheaper to be in Phoenix, Arizona, and probably easier to find employees right now, because I cover real estate and wow, everyone is moving. in Phoenix. One of the hottest housing markets in the country and also one of the hottest business climates in the country. I think it’s also a good thing for them. I don’t know if you had any ideas about this trial.
Jérémy Bowman: As for the supply chain, I think the Phoenix will increase its cost structure. Sorry, I lost my notes here.
Nicolas Rossolillo: Can I just come in? Sorry, go ahead, Jeremy
Jérémy Bowman: I wonder if authentication isn’t going to be an ongoing issue for them either. For me, I can see that it works both ways as an advantage or as an advantage that is going to get them in trouble with some of the other luxury brands and buyers as well.
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