What Happened?
Shares of secondhand luxury marketplace The RealReal (NASDAQ: REAL) jumped in the afternoon session after UBS raised its price target on the stock to $10.50 from $8.00. The investment firm kept its rating on the stock at "Neutral." UBS noted that its research pointed to continued sales momentum for the luxury consignment retailer in the third quarter. However, the firm also believed this positive performance was already factored into the current stock price. The stock had already gained 61% since the company's second-quarter earnings report, performing much better than the broader S&P 500 index. UBS forecasted third-quarter results that were in line with market expectations and anticipated that the company would keep its full-year guidance the same.
After the initial pop the shares cooled down to $10.62, up 3% from previous close.
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What Is The Market Telling Us
The RealReal’s shares are extremely volatile and have had 69 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 2 days ago when the stock gained 3.8% on the news that investors' concerns about US-China trade tensions were eased by President Trump's more conciliatory tone over the weekend. Following a sharp market drop the previous trading day driven by trade conflict escalation, Wall Street's main indexes opened significantly higher. The Dow Jones Industrial Average, S&P 500, and Nasdaq all saw gains of over 1%. The rebound was attributed to comments made by the President on social media, where he stated the "China situation will all be fine" and that the U.S. "wants to help China, not hurt it!!!" This shift in rhetoric prompted a return to risk assets, as traders brushed aside the previous week's fears. The rally ahead of the upcoming earnings season suggests that the "buy-the-dip" mentality remains strong among investors whenever trade jitters subside.
The RealReal is up 7.9% since the beginning of the year, and at $10.62 per share, it is trading close to 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 $700.98.
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