REAL Stock Drops on Authentication Policy Controversy

REAL Stock

REAL stock has been tanking this week after The RealReal Inc (NASDAQ:REAL) was accused of selling counterfeit goods on the luxury item marketplace.

Authenticity Concerns Weigh on REAL Stock

REAL shares have dropped over 20% since a report by CNBC was published on November 5, which claimed that the world’s largest online consumer marketplace for luxury items had been selling counterfeit goods, despite claiming that all its merchandise is “100% authentic” and are handled by a team of experts. However, CEO Julie Wainwright has defended her company’s authentication policy by saying, “we strive for perfection but we may not be perfect every single time.”

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REAL stock is continuing to sink this week following fresh quotes from Wainwright in which she said that the company cannot make a 100% guarantee that all of its goods are authentic. “We’re still humans. But I mean, you’re asking me to say do we have .001%? Of course. But that’s not what we focus on. What we focus on is keeping fakes out of the market. Our job is to be the safest place to transact–and we are.” Last year, luxury brand Chanel filed a lawsuit claiming that at least seven fake Chanel bags turned up on The RealReal.

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Report Shows What’s Real

According to the CNBC report, a total of 227 pages from Q1 and Q3 2019 show specific examples of what are labeled “TRR fakes.” The items include purported Louis Vuitton slides in a style that was never created, Ugg boots marked with the wrong logo and bow, and Moncler track pants tagged with a label that says T-shirt. REAL stock is currently trading for $17.20.

The RealReal went pubic back in June with a very successful IPO. On its first trading day, REAL stock opened at $28 a share, up 40% from its initial public offering price of $20 a share, and closed at $28.90. However, since then, the stock has dropped nearly 40% as the authenticity scandal rages on.

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