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RealReal (REAL)
NASDAQ:REAL
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RealReal
(NASDAQ:REAL)
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Rating:50Neutral
Price Target:
$12.50
▲(1.96% Upside)
Action:ReiteratedDate:02/27/26
The score reflects improving operating fundamentals and positive 2026 guidance (growth and EBITDA margin expansion), offset by high financial risk from negative equity and meaningful debt. Technicals are not supportive in the intermediate term (below key moving averages), and valuation remains challenged given ongoing losses and no dividend.
Positive Factors
High gross margins
Sustained ~75% gross margins (and ~89.6% on consignment) indicate durable unit economics and pricing power in luxury resale. High gross margins provide structural room to cover fulfillment, authentication and tech investments while enabling operating leverage as GMV and revenue scale.
Improving cash generation
Transition to positive operating and free cash flow demonstrates the business can fund operations and reinvest without constant external financing. Sustained cash generation reduces refinancing risk, supports AI/automation investments and gives flexibility to scale supply and marketing over the medium term.
Scale and GMV momentum
Crossing the $2B GMV milestone and double-digit GMV growth reflect market leadership in luxury resale. Scale creates network effects for consignors and buyers, enhances assortment, and enables fixed-cost absorption—supporting sustainable revenue growth and future margin expansion.
Negative Factors
Negative equity & elevated debt
A materially negative equity base combined with meaningful debt limits financial flexibility and raises refinancing and solvency risk. This capital structure constrains strategic options, increases sensitivity to economic cycles, and can hinder sustained investment in growth initiatives.
Take-rate / mix pressure
A structural shift toward higher-value items with lower percentage commissions means GMV growth can outpace revenue growth. Persistent take-rate compression would limit revenue conversion, margin gains and free cash flow even as GMV scales unless mitigated by pricing, fees or higher-value monetization.
Execution risk scaling Athena
Operational leverage depends on extending AI/automation (Athena) into mid- and higher-value items. Execution delays or difficulty scaling Athena would slow margin expansion and the cost efficiencies management forecasts, keeping profitability and unit-cost improvement uncertain over the medium term.
RealReal (REAL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.46B
Dividend YieldN/A
Average Volume (3M)2.81M
Price to Earnings (P/E)―
Beta (1Y)2.34
Revenue Growth14.30%
EPS Growth23.73%
CountryUS
Employees3,011
SectorConsumer Cyclical
Sector Strength84
IndustryLuxury Goods
Share Statistics
EPS (TTM)0.06
Shares Outstanding116,682,846
10 Day Avg. Volume3,184,254
30 Day Avg. Volume2,810,613
Financial Highlights & Ratios
PEG Ratio-6.72
Price to Book (P/B)-10.91
Price to Sales (P/S)6.54
P/FCF Ratio246.74
Enterprise Value/Market Cap2.65
Enterprise Value/Revenue5.58
Enterprise Value/Gross Profit7.48
Enterprise Value/Ebitda166.34
Forecast
1Y Price Target
$18.19Price Target Upside48.37% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)0.02
Revenue Forecast (FY)$764.52M
RealReal Business Overview & Revenue Model
Company DescriptionThe RealReal, Inc. operates an online marketplace for consigned luxury goods in the United State. It offers various product categories, including women's, men's, kids', jewelry and watches, and home and art products. The company was incorporated in 2011 and is headquartered in San Francisco, California.
How the Company Makes MoneyRealReal generates revenue through several key streams: consignment sales, where the company takes a commission on items sold on its platform; direct sales of luxury goods that it purchases outright; and subscription services related to its luxury consignment offerings. The company typically charges sellers a commission fee, which can vary based on the item's selling price and the seller's membership tier. Additionally, partnerships with luxury brands and designers enhance its inventory and credibility, while targeted marketing efforts drive customer engagement and sales. The growing trend of sustainable fashion and the increasing acceptance of pre-owned luxury items also contribute to its revenue growth.
RealReal Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call emphasized strong top-line growth (GMV +22% Q4; full year GMV +16%), meaningful margin expansion and improving cash generation, driven by AI/automation (Athena), sales productivity and product initiatives. Management met key operational targets (35% Athena coverage) and provided constructive 2026 guidance while outlining further investments in AI, search, MyCloset and supply initiatives. Notable concerns include a decline in take rate due to mix (impacting revenue conversion), direct-channel margin variability, modest full-year free cash flow, and the need to scale Athena and other pilots across higher-value items. Overall, positive execution and momentum were balanced with a set of execution and mix risks that the company is actively addressing.Q4-2025 Updates
Positive Updates
Strong GMV Growth and Annual Milestone
Q4 GMV of $616 million, up 22% year-over-year; full year 2025 GMV of $2.13 billion, up 16%, and the company surpassed $2 billion GMV for the year — a stated milestone indicating scale and market leadership.
Revenue Expansion
Q4 total revenue of $194 million, up 18% year-over-year; full year revenue of $693 million, up 15% versus prior year, driven by both consignment and direct channels.
Adjusted EBITDA and Margin Expansion
Q4 adjusted EBITDA of $22 million (11.3% of revenue), up $11 million versus prior year; full year adjusted EBITDA of $42 million (6.1% of revenue), a 450 basis point improvement year-over-year. 2026 guidance targets $57–$65 million (approx. 8% at midpoint).
Improved Cash Generation and Strong Q4 Cash Flow
Q4 operating cash flow of $49 million (+$21 million YoY) and Q4 free cash flow of $43 million (+$23 million YoY). Cash, cash equivalents and restricted cash of $166 million at quarter end; full year free cash flow of $5 million and operating cash flow of $37 million.
Gross Profit and Margin Gains
Q4 gross profit of $145 million (+19% YoY) and gross margin of 74.8%, +40 basis points YoY. Consignment gross margin improved to 89.6% (+60 bps YoY); direct gross margin increased to 26% in Q4 (up >1,200 bps YoY).
Operational Leverage from Athena and Automation
Reached target of 35% of units fully processed through Athena by year-end, credited as a primary driver of ops and tech leverage (330 bps of leverage called out). Company emphasized further automation ambitions for listings and fulfillment.
AI-Enabled Sales & Product Initiatives Driving Supply and Conversion
Rolled out Smart Sales and an AI pricing/valuation tool; active buyer growth accelerated to 9% on a trailing 12-month basis, orders +10% YoY and average order value +11% YoY. Natural language search tests showed improved new customer conversion.
Sales Force Productivity and Retention
Sales team tenure reached an all-time high with 54% of sales team at TRR for 2+ years. Experienced sales reps deliver ~20% more value than first-year reps, enhancing supply capture efficiency.
Intellectual Property and Competitive Moat
Company holds 12 patents related to luxury resale innovations, positioning it to capitalize on AI-enabled authentication and pricing advantages.
Negative Updates
Take Rate Decline
Q4 take rate declined to 36.5%, down 120 basis points year-over-year. Management attributes this to a favorable mix shift toward higher-value items that carry lower percentage take rates, which depresses revenue growth relative to GMV.
Direct Channel Margin Variability and Mix Sensitivity
While direct revenue grew 39% YoY in Q4 and direct gross margin improved to 26%, management notes direct margins will vary with mix (expected range ~15%–25%), indicating potential volatility in that channel's profitability.
Modest Full Year Free Cash Flow
Full year 2025 free cash flow was only $5 million despite strong quarterly cash generation, highlighting seasonality and timing sensitivities in converting earnings to sustained annual free cash flow.
Execution Required to Expand Athena Coverage
Athena covered 35% of units at year-end and must be extended into mid- and higher-value items over multiple quarters to unlock further leverage — presenting execution and timing risk.
Drop Shipping Still Early and Not a Major Driver
Drop shipping beta (started in watches, handbags, fine jewelry) showed healthy growth but is early-stage and 'not the main driver' of growth, limiting short-term supply expansion impact from this initiative.
Revenue Growth Guidance Below GMV Growth Due to Mix
2026 guidance projects GMV growth of 12%–15% but revenue growth of 10%–13%, reflecting mix-driven take-rate effects that could concern investors focused on top-line revenue conversion.
Remaining Gap to Long-Term Margin Targets
Although margins improved (6.1% adjusted EBITDA in 2025 and ~8% midpoint for 2026), the company remains well below its medium-term target of 15%–20% adjusted EBITDA, indicating continued reliance on future operational gains.
Company Guidance
Management guided full-year 2026 GMV growth of 12–15% and revenue growth of 10–13%, with gross margin expected to remain roughly consistent with 2025 and adjusted EBITDA pegged at $57–65 million (≈8% margin at the midpoint, ~200 bps expansion vs. 2025); they expect capex of 2–3% of revenue and that operating cash flow and free cash flow will benefit from working‑capital dynamics in H2. For Q1 2026 they guided GMV growth of 19–22%, revenue growth of 16–18%, direct revenue to be 12–15% of total revenue, and Q1 adjusted EBITDA of $11–13 million (≈6–7% of revenue, implying 340–430 bps of YoY margin expansion). For context, 2025 actuals were GMV $2.13B (+16%), revenue $693M (+15%), adjusted EBITDA $42M (6.1%), operating cash flow $37M and free cash flow $5M.RealReal Financial Statement Overview
Summary
Operations are improving (revenue growth, ~75% gross margin, narrowing net losses, and positive operating/free cash flow in 2025), but the balance sheet is a major constraint with negative equity and substantial debt, keeping overall financial risk elevated.Income Statement
Revenue has stabilized and returned to growth, rising to $692.8M in 2025 (up ~4.5%) after modest growth in 2024 and a decline in 2023. Gross margin is a clear strength, running ~75% in 2024–2025 versus ~58–69% in 2021–2023, indicating improved unit economics. However, profitability remains the key weak spot: the company is still loss-making (2025 net loss ~$41.8M, ~-6.0% margin), though losses have narrowed meaningfully from 2021–2024 levels, signaling progress but not yet a sustainable earnings profile.46
Neutral
Balance Sheet
Leverage and capitalization are the primary concerns. Stockholders’ equity is negative in recent years (about -$415.5M in 2025), which materially weakens balance-sheet flexibility and raises refinancing/solvency risk. Total debt remains high at ~$463.3M in 2025 (down from ~$546.6M in 2024 and ~$595.7M in 2022), which is a positive trajectory, but the combination of sizable debt and negative equity keeps the overall balance-sheet profile pressured.28
Negative
Cash Flow
Cash generation has improved notably: operating cash flow is positive in 2024 (~$21.5M) and strengthened further in 2025 (~$37.0M), while free cash flow turned positive in 2025 (~$18.4M) after being slightly negative in 2024. This is a meaningful improvement versus the large cash burn in 2020–2023. The main weakness is volatility—free cash flow growth is sharply negative in 2025 versus 2024—suggesting cash conversion is not yet consistently dependable.52
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 692.85M | 600.48M | 549.30M | 603.49M | 467.69M |
| Gross Profit | 516.82M | 447.52M | 376.28M | 348.69M | 273.48M |
| EBITDA | 19.27M | -79.44M | -125.79M | -158.13M | -171.55M |
| Net Income | -41.80M | -134.20M | -168.47M | -196.44M | -236.11M |
Balance Sheet | |||||
| Total Assets | 409.03M | 423.10M | 446.92M | 615.64M | 754.94M |
| Cash, Cash Equivalents and Short-Term Investments | 151.23M | 172.21M | 175.71M | 293.79M | 418.17M |
| Total Debt | 463.25M | 546.55M | 577.37M | 595.74M | 509.79M |
| Total Liabilities | 824.55M | 830.47M | 750.22M | 785.73M | 681.82M |
| Stockholders Equity | -415.52M | -407.38M | -303.30M | -170.09M | 73.13M |
Cash Flow | |||||
| Free Cash Flow | 18.37M | -4.50M | -90.44M | -114.42M | -189.59M |
| Operating Cash Flow | 37.01M | 21.55M | -61.27M | -91.56M | -142.15M |
| Investing Cash Flow | -29.22M | -25.59M | -42.13M | -36.92M | -43.44M |
| Financing Cash Flow | -28.87M | 539.00K | 226.00K | 4.10M | 252.91M |
RealReal Technical Analysis
Neutral
12.26
Price Trends
14.52
Negative
13.56
Negative
10.19
Positive
Market Momentum
-0.82
Negative
44.52
Neutral
78.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For REAL, the sentiment is Neutral. The current price of 12.26 is below the 20-day moving average (MA) of 12.32, below the 50-day MA of 14.52, and above the 200-day MA of 10.19, indicating a neutral trend. The MACD of -0.82 indicates Negative momentum. The RSI at 44.52 is Neutral, neither overbought nor oversold. The STOCH value of 78.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for REAL.
RealReal Risk Analysis
RealReal disclosed 56 risk factors in its most recent earnings report. RealReal reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
RealReal Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $349.47M | 34.28 | 18.19% | ― | 23.75% | 59.66% | |
65 Neutral | $1.33B | 2.16 | 56.42% | ― | 97.28% | ― | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
51 Neutral | $2.44B | -4.42 | -96.50% | ― | -17.66% | -223.06% | |
51 Neutral | $155.17M | -6.82 | -2.88% | 14.29% | 1.32% | -175.81% | |
50 Neutral | $1.46B | -8.84 | ― | ― | 14.30% | 23.73% | |
42 Neutral | $202.31M | -0.87 | -2353.49% | ― | -23.54% | -49.41% |
* Consumer Cyclical Sector Average
REAL
RealReal
12.26
5.44
79.77%
CPRI
Capri Holdings
20.51
-1.47
-6.69%
ELA
Envela
13.46
7.13
112.64%
LUXE
LuxExperience
9.67
-0.77
-7.38%
LANV
Lanvin Group Holdings
1.73
-0.25
-12.63%
BRLT
Brilliant Earth Group
1.55
0.31
25.00%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.