I also headed over to Instagram to get a sense of the engagement there. Poshmark blows both of them out of the water with over 125k followers on Twitter while Revolve sits in between with over 40k. This is despite the fact that the RealReal tweets more than twice as often as ThredUp. 60% of ThredUp tweets have engagement compared to only 22.7% for the RealReal. ThredUp has more twitter followers, 16,000 vs 14,200, and receives more engagement. According to Craft, ThredUp has a leg up on the RealReal in this department. With all of this competition is it any wonder that EPS estimates for Q1 2021 have been revised downward 10 times in the last 90 days? Where's the Buzz?Ĭompanies in this space who are competing for Millennial and Gen Z dollars are heavily reliant on social media buzz. There are also a host of private companies and an elephant lurking around the edges you guessed it, Amazon Luxury Stores. In fact, Revolve group also went public in June of 2019 and is head and shoulders above the RealReal by nearly any measure. Revolve Group, Inc ( RVLV) is another more mature player competing for the same consumer dollars. ( TDUP) and Poshmark, Inc ( POSH) are the most obvious, and while the RealReal caters to higher end luxury, the latter two are encroaching on this space. This puts pricing pressure on the RealReal and has hurt the top and bottom lines. Because of this, there are several young competitors in the space and a few heavyweights lurking around the edges. Providing the platform for online luxury sales is not a wide-moat endeavor. Small Moat Leads to Increasing Competition The Company should be well situated to take advantage of the current luxury consignment trend, however poor management and increased competition have led to disappointing results that I expect to continue into the foreseeable future. The company went public with some fanfare in June of 2019, however the stock, and the company, have struggled since then. They make money by charging a fee for sales made through the platform. The RealReal, Inc (The RealReal or the Company, hereafter) operates an online marketplace for the sale of brand name and luxury items available on consignment. Competitors offer better value for investors and I recommend passing on this stock. There is little, if any, light at the end of the tunnel for shareholders. While this is acceptable for companies with high revenue growth, large investments in emerging technologies, or growing market share dominance, the RealReal is not one of these. The RealReal's ( NASDAQ: REAL) financial results tell the story of a business that is feasting on debt and equity financing and losing more cash with each successive year.
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