Shares of The RealReal (REAL, Financial) fell by 18.76% as the company announced its Q4 2024 earnings report. The decline in stock price is attributed to the disappointing full-year EBITDA guidance and a slight miss in the number of active buyers compared to Wall Street estimates.
In terms of financial performance, The RealReal's revenue increased by 14% year over year, largely driven by a 12% increase in gross merchandise value (GMV). Despite this growth, the figures only slightly exceeded Wall Street's expectations, providing limited optimism for investors.
On the profitability front, there was an improvement, with the full-year 2025 EBITDA projected to range between $20 million and $30 million. However, this projection was still below analysts' expectations. Compounding investor concerns, the company's first-quarter revenue guidance hints at a potential slowdown after a robust Q4, which benefited from strong holiday sales.
Analyzing the stock further, The RealReal (REAL, Financial) is currently priced at $6.47. According to the GF Value, the stock is significantly overvalued with a GF Value of $2.33. The company's market capitalization stands at $709.31 million, with a hefty enterprise value of $1,266.19 million. Notably, the company faces significant financial challenges, as indicated by its poor financial strength. The Altman Z-Score is -2.69, which falls within the distress zone, indicating potential bankruptcy risk within the next two years.
Additionally, The RealReal (REAL, Financial) struggles with a declining revenue per share over the past 12 months and a notable level of insider selling activity. On the positive side, the company's operating margin is expanding, and the Beneish M-Score suggests that it is unlikely to be an earnings manipulator.
Investors should consider these mixed signals while evaluating the potential risks and rewards associated with The RealReal (REAL, Financial). Despite some improvement in profitability metrics, the company faces substantial financial challenges that are reflected in its current market performance and valuation.
