B. Riley initiated coverage on The RealReal (NASDAQ:REAL) with a Buy rating and a 12-month price target of $8, highlighting the company’s improving margins, strong market position, and favorable supply dynamics.
As the largest online resale platform for authenticated luxury goods, The RealReal has posted a 13% compound annual growth rate in gross merchandise value over the past five years. Recent changes to its commission structure and a shift away from direct buying have helped boost profitability, with gross margins expanding by roughly 12 percentage points since the first quarter of 2023.
The company has now delivered positive adjusted EBITDA for three consecutive quarters, and B. Riley expects further improvements as The RealReal continues to leverage platform investments and scale.
The firm also sees the company’s focus on domestically sourced, pre-owned inventory as a competitive advantage, particularly in an environment where tariffs are driving up costs for traditional retailers.
