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The RealReal (REAL - Free Report) is a Zacks Rank #5 (Strong Sell) that operates an online marketplace for consigned luxury goods. It offers various resale product categories, including women's, men's, kids', jewelry, and watches, as well as home and art products.
The stock rallied to IPO levels, but has since pulled back as investors are starting to realize the stock has gotten ahead of itself. With earnings coming up in late February, the bulls have to question whether the more than 100% run higher since last earnings is justified.
About the Company
The RealReal was founded in 2011 and is headquartered in San Francisco, CA. The company employs over 2,300 people, who maintain and operate therealreal.com
REAL is valued at $2.4 billion and has yet to turn a profit. Because of this high valuation, the company holds a Zacks Style Score of “F” in Value.
Q3 Earnings Miss
The November earnings report saw an 11% surprise on EPS to the downside. The stocks initial reaction was lower, but the overall market strength helped for a 30% rally into the end of 2020.
Looking at the numbers, its hard to see what investors are seeing. The company missed on both the top and bottom line, while year over year GMV comps were disappointing.
On the plus side, trailing twelve months active buyers was up 14% year over year. However, considering the companies valuation that growth isn’t spectacular.
Estimates
The company reports EPS on February 23rd and looking at the estimates, they have continued to fall. Over the last 90 days, analysts have lowered estimates form -$0.23 to -$0.39
Looking at the current year, we see the same trend. Over the same time frame, analysts dropped their numbers from -$1.44 to -$1.66.
Technicals
The stock has been going up with the overall market euphoric run. However, the stock is currently testing its 21-day MA at $24.20. Next level of support is the 50-day at $19.10 and then the 200-day at $15.50.
The $19 level looks OK for buyers that like the stock. That level is a 61.8% Fibonacci retracement level, drawn from the $12.50 lows to recent highs.
In Summary
Stocks continue to go up for no reason in this market. However, for REAL, lets be a bit cautious as we head into earnings. There are plenty of other stocks that are better positioned.
The Consumer Products-Discretionary Peers Industry is in the Top 36% of our Zacks Industry Rank. While REAL might have a low rating, other stock in the group that look more appealing include Central Garden & Pet Company( CENT) and Reynolds Consumer Products(REYN).
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Bear of the Day: The RealReal (REAL)
The RealReal (REAL - Free Report) is a Zacks Rank #5 (Strong Sell) that operates an online marketplace for consigned luxury goods. It offers various resale product categories, including women's, men's, kids', jewelry, and watches, as well as home and art products.
The stock rallied to IPO levels, but has since pulled back as investors are starting to realize the stock has gotten ahead of itself. With earnings coming up in late February, the bulls have to question whether the more than 100% run higher since last earnings is justified.
About the Company
The RealReal was founded in 2011 and is headquartered in San Francisco, CA. The company employs over 2,300 people, who maintain and operate therealreal.com
REAL is valued at $2.4 billion and has yet to turn a profit. Because of this high valuation, the company holds a Zacks Style Score of “F” in Value.
Q3 Earnings Miss
The November earnings report saw an 11% surprise on EPS to the downside. The stocks initial reaction was lower, but the overall market strength helped for a 30% rally into the end of 2020.
Looking at the numbers, its hard to see what investors are seeing. The company missed on both the top and bottom line, while year over year GMV comps were disappointing.
On the plus side, trailing twelve months active buyers was up 14% year over year. However, considering the companies valuation that growth isn’t spectacular.
Estimates
The company reports EPS on February 23rd and looking at the estimates, they have continued to fall. Over the last 90 days, analysts have lowered estimates form -$0.23 to -$0.39
Looking at the current year, we see the same trend. Over the same time frame, analysts dropped their numbers from -$1.44 to -$1.66.
Technicals
The stock has been going up with the overall market euphoric run. However, the stock is currently testing its 21-day MA at $24.20. Next level of support is the 50-day at $19.10 and then the 200-day at $15.50.
The $19 level looks OK for buyers that like the stock. That level is a 61.8% Fibonacci retracement level, drawn from the $12.50 lows to recent highs.
In Summary
Stocks continue to go up for no reason in this market. However, for REAL, lets be a bit cautious as we head into earnings. There are plenty of other stocks that are better positioned.
The Consumer Products-Discretionary Peers Industry is in the Top 36% of our Zacks Industry Rank. While REAL might have a low rating, other stock in the group that look more appealing include Central Garden & Pet Company( CENT) and Reynolds Consumer Products(REYN).
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>