The RealReal (REAL) – The Carvana of Luxury
$30 Price Target
We have watched Carvana’s (CVNA) stock price go up >20x since the company’s 2017 IPO as bears incorrectly called the company’s business model “uneconomic”. Reflecting back, what investors missed was that CVNA was disrupting an outdated industry by providing a convenient end-to-end solution that differentiated the business from every other website that sold used cars.
Just like the used car market and CVNA, we see the same dynamic playing out in the luxury resale industry today with The RealReal (REAL). We have watched this business for years just waiting for the inflection point and have finally found it if we read the words from yesterday’s Raymond James Conference when CEO Julie Wainwright stated:
“Exiting this year, you are going to start seeing some leverage and it will only go from strength to strength… the near-term things are only going to get better because the demand is there and the supply is coming in and the structure we have around our business is really going to be something to build on and we’ve also said NOT something to continue to invest in so really smart investments we made early that are going to pay the dividends and to be honest we made them in 2019”
Showing the operating leverage is all that was missing from a company which is disrupting the luxury resale market by providing a do it for me solution that is unmatched in the industry.
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