The RealReal, Inc. Beat Analyst Profit Forecasts, And Analysts Have New Estimates

It's been a sad week for The RealReal, Inc. (NASDAQ:REAL), who've watched their investment drop 18% to US$5.05 in the week since the company reported its first-quarter result. It looks like a credible result overall - although revenues of US$160m were what the analysts expected, RealReal surprised by delivering a statutory profit of US$0.56 per share, instead of the previously forecast loss. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on RealReal after the latest results.

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Taking into account the latest results, the consensus forecast from RealReal's eight analysts is for revenues of US$656.9m in 2025. This reflects a modest 6.5% improvement in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.52 per share. Before this latest report, the consensus had been expecting revenues of US$655.7m and US$0.47 per share in losses. While this year's revenue estimates held steady, there was also a noticeable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

View our latest analysis for RealReal

As a result, there was no major change to the consensus price target of US$8.73, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values RealReal at US$15.00 per share, while the most bearish prices it at US$2.40. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that RealReal's revenue growth is expected to slow, with the forecast 8.8% annualised growth rate until the end of 2025 being well below the historical 14% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.9% annually. Even after the forecast slowdown in growth, it seems obvious that RealReal is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at RealReal. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$8.73, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for RealReal going out to 2027, and you can see them free on our platform here..

Before you take the next step you should know about the 4 warning signs for RealReal (1 is a bit concerning!) that we have uncovered.

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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.