Can RealReal's (REAL) Raised Guidance Outweigh Investor Doubts About Profitability and User Trends?

• Earlier this week, The RealReal raised its 2025 revenue guidance to between US$667 million and US$674 million, despite market concerns about declining revenue per user and tightening cash reserves.
• This move highlights a distinct gap between management’s optimistic outlook and investor apprehension regarding profitability and liquidity challenges in the current business climate.
• We'll explore how the spotlight on declining revenue per user may shape RealReal's investment narrative going forward.

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RealReal Investment Narrative Recap

To be a shareholder in The RealReal right now, you have to believe the company can ultimately offset current margin and liquidity pressures by capturing growing demand for authenticated, sustainable luxury goods, and that operational efficiencies or innovation can overcome recent declines in revenue per user and cash reserves. The recent uptick in 2025 revenue guidance draws attention back to near-term revenue trends, but does not materially shift the central catalysts or biggest risk: whether the business can maintain profitability momentum without resorting to costly financing.

Among the recent developments, The RealReal’s August decision to raise its full-year 2025 revenue outlook to US$667 million to US$674 million stands out as most relevant, directly addressing concerns about sluggish top-line growth. This new guidance will likely keep investor attention focused on near-term revenue performance as a critical catalyst, even as underlying questions about margins and operational execution persist.

Yet with revenue per user continuing to slip, the real question facing investors involves how much further margin pressures might run before stabilizing, especially if...

Read the full narrative on RealReal (it's free!)

RealReal's narrative projects $842.8 million revenue and $40.0 million earnings by 2028. This requires 9.8% yearly revenue growth and a $75.4 million increase in earnings from -$35.4 million currently.

Uncover how RealReal's forecasts yield a $10.83 fair value, a 3% downside to its current price.

Exploring Other Perspectives

Community estimates set RealReal’s fair value between US$10.83 and US$28.90 based on two unique analyses, showing wide variation in return expectations from individual investors. While opinions differ, persistent declines in revenue per user highlight ongoing uncertainty about the company’s ability to defend profitability, prompting many to weigh risks and growth potential from multiple angles.

Explore 2 other fair value estimates on RealReal - why the stock might be worth just $10.83!

Build Your Own RealReal Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your RealReal research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free RealReal research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate RealReal's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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