Did Insider Selling Amid Strong Q3 Metrics Just Shift RealReal's (REAL) Investment Narrative?

• In recent days, Manatuck Hill Partners cut its position in The RealReal by 350,000 shares and Chief Accounting Officer Steve Lo sold 62,355 shares, even as the value of Manatuck’s remaining stake rose to about US$13.6 million.
• Despite this steady pattern of insider selling, The RealReal’s latest Q3 results showed record growth in gross merchandise volume and revenue, stronger adjusted EBITDA, and higher free cash flow, supporting management’s more confident full-year outlook.
• We’ll now explore how The RealReal’s stronger Q3 profitability trends and raised guidance may influence its longer-term investment narrative.

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RealReal Investment Narrative Recap

To own The RealReal, you need to believe authenticated luxury resale can scale into a sustainably profitable business, supported by growing demand and improving unit economics. The recent insider and fund selling does not appear to materially alter the near term catalyst around execution on AI driven efficiency and margin gains, but it does underline the standing risk that the company is still unprofitable with negative equity and relies on continued investor confidence.

The most relevant update here is the latest Q3 release, which paired record GMV and revenue with better adjusted EBITDA and higher free cash flow, giving management confidence to raise full year guidance. That stronger operating momentum is important because it supports the core catalyst of margin expansion through automation and higher volume, even as insider selling and a rich sales multiple leave less room for disappointment if take rates or supply growth soften.

But while guidance has improved, investors should also be aware that the platform’s declining take rate could eventually...

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 earnings increase from -$35.4 million today.

Uncover how RealReal's forecasts yield a $15.12 fair value, a 3% upside to its current price.

Exploring Other Perspectives

Two fair value estimates from the Simply Wall St Community span a wide range from about US$4.50 to US$15.13 per share, showing how far apart individual views can be. Readers should weigh that spread against the key risk that The RealReal’s take rate is slipping just as investors are focusing on margin improvement and long term profitability, and consider several alternative viewpoints before forming their own expectations.

Explore 2 other fair value estimates on RealReal - why the stock might be worth less than half the current price!

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 1 key reward and 4 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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