REAL Stock Rises After Promising Earnings Debut

REAL Stock

The RealReal Inc. (NASDAQ:REAL) posted lower than expected losses in its debut quarterly report, boosting REAL stock 7.2% during late trading Thursday.

The RealReal Inc is an online and bricks-and-mortar retailer of second-hand luxury goods that went public in June. The company reported that revenue rose by 51% to $71 million USD, narrowly beating analyst expectations of $70.1 million USD. However, the company still posted a net loss, although slightly narrower than expected. Investors greeted the news with positivity as REAL stock recovered from its lowest point on Wednesday since its IPO of $14.28.

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A Big Opportunity for Investors

The second-hand retail sector could represent a big opportunity for investors. For 2019, The RealReal expects total sales to amount to nearly $1 billion USD, showing the huge potential in the market for second-hand luxury goods. 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, which is a clear example of the appetite for companies and services of this nature.

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Not All Good News for REAL Stock

Last week, REAL Stock tumbled nearly 17% off the back of disappointing results for online luxury retailers Revolve Group Inc (NYSE:RVLV) and Farfetch Ltd (NYSE:FTCH). Julie Wainwright, Chief Executive of The RealReal, said greater than expected discontinuation of lines by mainstream department stores is the biggest threat to second-hand retailers, which hit the price of preowned women’s apparel the most.

According to The Wall Street Journal, department stores started offering discounts at an earlier time in the year than is historically normal. While REAL stock was buoyed by this week’s results, it’s worth remembering that holiday season, the biggest time of the year for retailers, is not that far away and with the retail sales phenomenon that is Black Friday just over 100 days away, it’ll be interesting to see how the company’s stock fares during the post-Thanksgiving Day sales mania.

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Featured image: Pixabay