RealReal Shares Slide After Earnings, But Wall Street Stays Optimistic

RealReal Inc REAL shares are plunging one day after reporting its second-quarter report. Here's what The Street had to say.

Credit Suisse

Credit Suisse analyst Michael Binetti said despite heightened investor fears heading into the quarter, it was key for the company to show upside to top line consensus expectations.

“While REAL may choose to spend back some revenue upside to continue to fund new customer growth, we see REAL in a solid position to continue driving positive revisions to Consensus estimates through the year,” he wrote in a note.

Binetti reiterated an Outperform rating with a $30 price target.

Bank of America

Bank of America analyst Justin Post saw the second quarter as solid with order volume upside, increase in repeat customer GMV and progress on pricing automation as positives. He cited slightly lower active buyers and lower average order value as negatives.

“We are positive on the early stage of online penetration in luxury and Real’s competitive barriers to entry. We see REAL’s 2H guidance and comments on demand as positive given disappointments in the online retail sector,” Post said.

Post maintains a Neutral rating and raised his price target from $24 to $25.

KeyBanc

KeyBanc analyst Edward Yruma said the company’s 40% year-over-year GMV growth points to strong demand for value-priced luxury goods.

“REAL has been successful in providing access to luxury products/brands at more accessible price points - typically 40% off as outlined in our analysis in our initiation. An early push by department stores to promote early- Saks, Neiman Marcus, as well as online competitors - did impact women’s apparel, but the strength of REAL’s mix offset promotional headwinds,” said Yruma.

The analyst thinks physical locations and fine watches/jewelery presents a compelling long-term growth opportunity for the company.

“REAL’s Los Angeles store, in particular, has been a key driver of the Company’s growing men’s business. We expect REAL to continue to build out its store fleet. Jewelry is REAL’s second largest category and continues to perform well, growing in line with the Company overall this quarter. “

Yruma maintains an Overweight rating with a $31 price target.

Price Action

The RealReal shares are down 15% at $14.45 Wednesday afternoon.

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