RealReal Gets Downgraded Downgraded: Analyst Slashes Luxury Resale Store's Rating By Two Notches

Decelerating growth will likely extend RealReal Inc.’s REAL timeline to breakeven, according to Bank of America Securities.

The RealReal Analyst: Michael McGovern downgraded the rating for RealReal by two notches from Buy to Underperform, while slashing the price target from $7.00 to $2.75.

The RealReal Thesis: The company reported its revenues ahead of expectations but missed on the EBITDA front, McGovern said in a note.

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Gross merchandize value came in at $454.2 million, missing Street expectations by $9.6 million.

"Mgmt noted pressure on GMV was in-part due to sales team attrition, impacting supply levels," he added. "Product mix-shift to lower AOV items also contributed to lower top-line growth, as category mix shifted towards pre-COVID levels more quickly than expected."

He expressed concern about decelerating growth impacting “the company’s ability to generate leverage on its fixed cost base."

REAL Price Action: Shares of RealReal declined by 5.74% to $2.88 at the time of publication Wednesday.

Image: Courtesy of TheRealReal.com