What Happened?
Shares of secondhand luxury marketplace The RealReal (NASDAQ: REAL) jumped 3% in the afternoon session after investor optimism continued to build following the company's impressive second-quarter 2025 earnings report released earlier in the month.
The positive momentum stems from the luxury consignment company's second-quarter results, which showcased strong growth and improved profitability. The RealReal reported a 14% year-over-year increase in revenue to $165.2 million, beating analyst expectations. Profitability also saw a significant boost, with Adjusted EBITDA reaching $6.84 million, a marked improvement from the prior year and nearly double what analysts had forecast. The company's adjusted loss per share of $0.06 also came in better than anticipated. Buoyed by this strong performance, the company raised its full-year revenue guidance to $670.5 million at the midpoint and provided strong full-year EBITDA guidance that exceeded Wall Street estimates.
After the initial pop the shares cooled down to $7.99, up 3.4% from previous close.
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What Is The Market Telling Us
The RealReal’s shares are extremely volatile and have had 66 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 3.4% on the news that markets pulled back as hotter-than-expected wholesale inflation data was released, raising concerns about the future path of interest rates. The U.S. Labor Department reported that the Producer Price Index (PPI), which measures inflation at the wholesale level, jumped 3.3% year-over-year in July, significantly above economists' forecasts of 2.5%. This unexpected increase suggests that cost pressures are building for businesses, which could eventually be passed on to consumers. The hotter-than-expected data prompted investors to scale back bets on an imminent interest rate cut by the Federal Reserve. Higher interest rates can dampen economic activity and negatively affect the valuations of growth-oriented stocks, such as those in the internet sector, leading to a broad market retreat.
The RealReal is down 18.8% since the beginning of the year, and at $7.99 per share, it is trading 28.5% below its 52-week high of $11.18 from December 2024. Investors who bought $1,000 worth of The RealReal’s shares 5 years ago would now be looking at an investment worth $454.88.
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