That’s not a stutter. The Real Real stock is one asset that’s been on the decline. Investors may also feel a little skittish on the company because on the 8th of January, the CEO, Julie Wainright, sold more than 70,000 shares of Real Real stock. That bit of news usually doesn’t offer confidence in a company’s future. Julie Wainright would see gross earnings of around $1,330,500 with that sale but the leader of the company still owns a hefty number of shares in the company’s stock; about 4,600,000 shares, actually. She’s not the only executive selling shares, the COO, and others within the firm have also been selling.
The Real Real stock is up from its yearly low, up to around $17 from $12.58, but inevitably down from its high flying IPO opening price of around $30.
Despite the gap, investors are checking this stock to see if there’s potential value there.
Let’s take a look at some financials.
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Real Real Company Performance
The Real Real seems to have earnings momentum as it beat expectations slightly; it revealed earnings per share of around $0.27. The high-end consignment e-commerce company reported revenues under $81 million, again outperforming expectations for the prior quarter.
Revenues are up more than 40% when compared to the preceding year.
Several Firms Are In Favor of the Real Real Stock
Research firms seem to be in favor of the stock as several have given the stock an outperform rating, while others have increased their price targets on the stock. The big fish seem to think that this stock is at least worth holding onto, if not outright buying.
Investors View The Real Real Stock as Undervalued
The Real Real stock may certainly be undervalued if you think that the company will continue to beat expectations and grow earnings at a rapid click. A few analysts at places such as Simply Wall St. expect the Real Real company to continue to deliver robust growth and have a positive levered free cash flow of $31 million by 2023.
But why do they expect this to be the case?
Simple.
The Real Real is just one of several companies such as Poshmark and Depop, that have been leading the growth of second-hand clothing commerce. These brands are simplifying the process for both buyers and sellers and keeping it as seamless as possible. Indeed, the second-hand e-commerce industry should grow to reach over $20 billion within three to six years, according to GlobalData. Other brands, such as GOAT, are also on the rise that supports specific types of attire.
Issues To Watch
Remember that this is a growth stock, and as with many growth stocks, this one has negative earnings per share at the current moment. But since its a growth stock, we would want to know what potential factors may impede that supposed growth in the present and the future.
Fake Goods
The first factor may be that of allegations of fake attire, passing through the platform, masquerading as an authentic Tom Ford, or a Versace, making it less Real Real, and more, Fake Fake.
You see, you might expect inauthentic items from Amazon and may be saddened by the purchase if it is not up to your standards, but you may be more forgiving on Amazon.
But you expect much more from a niche retailer platform such as the The Real Real.
Why ?
Because the platform only has one job provide authentic high end luxury goods to you at an attractive price. When you buy a Brioni suit from The Real Real, you want, nay, you need it, to be authentic. You would fall into a state of disarray if you were to find that your Brioni was actually Frioni, a fugazi.
It would be heartbreaking because you go to this specific platform because it professes to serve up high-quality goods at an affordable price.
That’s not just a tertiary problem, if true, its an existential crisis.
CNBC notes “Of nearly 1,400 reviews of the company found online, the top complaints are fakes, damage and poor customer service. The complaints include wrong sizes and that the photos online were misleading because they did not match the appearance of the item.”
Remember that fake goods can lead to lawsuits, and Chanel already filed for one.
The company is sure to address this problem but watch the stock and the company in the short term prior to making a decision. Remember that The Real Real is one company that aims to take high-end secondhand goods to a larger scale, the entity has much going for it but must also solve a few critical issues.
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