The RealReal Earnings: Lukewarm 2025 Guidance Gives Market Pause; Shares Still Look Very Expensive

No-moat The RealReal made a preearnings announcement of a decent fourth-quarter 2024. The firm also announced the renegotiation of roughly two thirds of its $276.5 million in 2028 convertible notes (extending maturities until 2031) on Feb. 10, but softer guidance than hoped for 2025 sent shares spiraling lower by about 6% during intraday trading. While achieving a first full year of adjusted EBITDA profitability is a laudable step, we really struggle to make sense of current market valuations for a business that continues to sport significant flaws, from high variable costs limiting its margin upside to exceedingly competitive end markets. To this effect, we continue to maintain that the presence of well-capitalized competitors like narrow-moat eBay and Poshmark (a narrow-moat Naver subsidiary) are likely to result in ongoing market share losses for The RealReal, which has been forced by necessity to curtail many of its investment priorities as it seeks to achieve profitability. After digesting results and guidance, we plan to leave our $2.25 per share fair value estimate largely unchanged, with the business looking extremely overvalued at current prices.