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The RealReal Reels From Retail Retrenchment

May 05, 2020 12:43 PM ETThe RealReal, Inc. (REAL)1 Comment


  • The RealReal went public in June 2019, raising $300 million in a U.S. IPO.
  • The firm operates on online luxury goods consignment website and a few retail stores.
  • REAL planned to expand its retail footprint in 2020, but with the Covid19 pandemic those plans have likely been set aside.
  • My bias on the stock is Neutral.
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Quick Take

The RealReal (NASDAQ:REAL) went public in June 2019, pricing its shares at $20.00 each and raising $300 million in gross proceeds.

The firm has created a website that acts as a marketplace for users wishing to consign their clothing and buyers looking for already used apparel and accessories with a focus on luxury and fashion items.

REAL will need to recast its plans now that its retail operation and related hopes for growth have been paused due to the Covid19 pandemic.

My bias on the stock is Neutral until management can prove its ability to make a serious move toward operating breakeven while still growing the business in a pandemic environment.


San Francisco, California-based REAL was founded in 2011 to develop a second-hand online marketplace where people list their authenticated luxury goods with a user base of about 1.4 million members as of the end of March, 2019.

Management is headed by founder, CEO and Director Julie Wainwright, who was previously Consulting CEO/Mentor at Springboard Enterprises.

The RealReal has developed an online luxury consignment technology and service where people send their luxury goods to be inspected and authenticated, photographed by the company’s photographers and finally, after its price has been adjusted based on previous transaction history and real-time market demand, listed on the firm’s online marketplace.

Below is a brief overview video of the company’s latest marketing campaign:

Source: RealReal

The company’s main revenue sources are orders processed through its website, mobile app as well as three retail stores located in New York and Los Angeles.

Market & Competition

According to a recent market research report by Shopify, the global ecommerce fashion industry was valued at $481 billion in 2018 and is projected to reach $713 billion by 2022.

The main factors driving market growth are rising

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This article was written by

Donovan Jones profile picture

I'm the founder of IPO Edge on Seeking Alpha, a research service for investors interested in IPOs on US markets. Subscribers receive access to my proprietary research, valuation, data, commentary, opinions, and chat on U.S. IPOs. Join now to get an insider's 'edge' on new issues coming to market, both before and after the IPO. Start with a 14-day Free Trial.

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Comments (1)

Brick and Mortar is not going to be a big part of their business. I think the retail presence is mainly for brand building, loyalty, and eventually driving more business to the website. I think this will be a tough year for them because people might not be spending on luxury, but the delays in their retail footprint is not going to be their biggest issue. This company has lots of cash and no debt, should be able to weather the storm. If you believe in the fundamental thesis that consignment and the circular economy is here to stay, then I think RealReal is positioned well to capture a good amount of that share. If you don’t believe it is the future, then I think it is best to stay away.
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