J Capital Research

Independent Insight Provider

J Capital Research, a U.S. company, publishes highly diligenced research reports on publicly traded companies, relying on deep, on-the-ground primary research. J Capital has particular expertise in the Chinese market, but we look at over-valued companies throughout the world. As an activist short- and long-research shop, when we form a clear view, we publish free, public reports to inform the investing public and never disguise our identity. We believe the internet has afforded an opportunity to small, unaffiliated investors to leapfrog the big banks, with their conflicts of interest, and obtain unbiased information on traded companies. We pride ourselves on our independence and the quality of our work. We hope the work speaks for itself.

Equity Bottom-Up

<ul><li>Product authentication and legitimacy are paramount for The RealReal (NASDAQ: REAL), which sells used luxury items.</li><li>But our research indicates that REAL’s authentication lets through many counterfeits, and that has enraged both buyers and sellers, undermining the sense of trust.</li><li>REAL has applied AI to the authentication problem to speed things up, but we see no evidence of effectiveness.</li></ul>

Product authentication and legitimacy are paramount for The RealReal (NASDAQ: REAL), which sells used luxury items.But our research indicates that REAL’s authentication lets through many counterfeits, and that has enraged both buyers and sellers, undermining the sense of trust.REAL has applied AI to the authentication problem to speed things up, but we see no evidence of effectiveness.

Worry About Fake Fakes Makes RealReal a Bad Bet

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

<ul><li>4Q results in line with pre-announcement. REAL delivered $504 million in gross merchandise volume (GMV), $164 million in revenue, $11 million in adjusted EBITDA, and for the first time in its history, generated positive FCF of ~$800k for the full year.</li><li>More importantly, the company restructured its debt, which extended maturities.</li><li>REAL expects HSD-LDD growth in the mid-term. For 2025, the company guided to GMV of $1.96-1.99 billion, up 7-9% Y/Y (versus the Street at $1.96 billion), revenue of $645-660 million, up 7-10% Y/Y (versus the Street at <span style="font-size: var(--content-font-size);">$655 million), and EBITDA of $20-30 million.</span></li></ul>

4Q results in line with pre-announcement. REAL delivered $504 million in gross merchandise volume (GMV), $164 million in revenue, $11 million in adjusted EBITDA, and for the first time in its history, generated positive FCF of ~$800k for the full year.More importantly, the company restructured its debt, which extended maturities.REAL expects HSD-LDD growth in the mid-term. For 2025, the company guided to GMV of $1.96-1.99 billion, up 7-9% Y/Y (versus the Street at $1.96 billion), revenue of $645-660 million, up 7-10% Y/Y (versus the Street at $655 million), and EBITDA of $20-30 million.

The RealReal, Inc - Expect Profitable HSD-LDD Top-Line Growth to Continue

<ul><li>We are initiating coverage of REAL. Post-COVID, almost all of the small-cap online apparel retailers have tried to restructure their businesses to focus on profitability.</li><li>REAL has been a standout case. After issuing a five-year outlook in March 2022 that emphasized growth (virtually at all costs), REAL reversed its strategy in a bid to become EBITDA and free cash flow (FCF) positive as quickly as possible.</li><li>In the process, it materially de- emphasized (1) its direct sales business, which was inherently lower-margin and exposed REAL to both pricing pressure and inventory risk, and (2) the lower-priced consignment items, which were loss-making from the get-go. </li></ul>

We are initiating coverage of REAL. Post-COVID, almost all of the small-cap online apparel retailers have tried to restructure their businesses to focus on profitability.REAL has been a standout case. After issuing a five-year outlook in March 2022 that emphasized growth (virtually at all costs), REAL reversed its strategy in a bid to become EBITDA and free cash flow (FCF) positive as quickly as possible.In the process, it materially de- emphasized (1) its direct sales business, which was inherently lower-margin and exposed REAL to both pricing pressure and inventory risk, and (2) the lower-priced consignment items, which were loss-making from the get-go. 

The RealReal, Inc. - Not REALly Out of the Woods Yet; Initiating Coverage

Independent in-depth research from Finimize, Finimize

Finimize Research

Independent in-depth research from Finimize

Finimize

Finimize is the #1 information platform for modern investors. We empower people to become smarter investors with bitesize insights from world-class analysts. 1 million+ strong community, 250 partners.

Thematic (Sector/Industry)

<ul>
<li>The US economy’s resilience hasn’t come from the many – it’s come from the top 10% as the “wealth effect” from rising asset prices has boosted spending.</li>
<li>But it works in reverse too.  Since the richest make up nearly half of America’s consumer spending, that could lead to a serious economic fallout.</li>
<li>It’s worth considering protecting your portfolio. I’ve pulled together one list of companies that should do well and another that could suffer from the change in climate.</li>
</ul>


The US economy’s resilience hasn’t come from the many – it’s come from the top 10% as the “wealth effect” from rising asset prices has boosted spending.
But it works in reverse too.  Since the richest make up nearly half of America’s consumer spending, that could lead to a serious economic fallout.
It’s worth considering protecting your portfolio. I’ve pulled together one list of companies that should do well and another that could suffer from the change in climate.


A Defensive Portfolio Prepared For The Wealth Effect’s Reversal

<ul><li>The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x from 18.1x at the end of 2024.</li><li>Prospective earnings for the index are down 2.3% so far this year, but we note that it has outperformed the broader S&amp;P 600 Small Cap Index, which is down 6.3%.</li><li>Meanwhile, the S&amp;P SmallCap 600 Index is down 13.1% YTD, better than the WTR Consumer Products Index, despite relative earnings underperformance versus our index, as its prospective absolute P/E ratio compressed a lesser 1.2x to 15.3x from 16.5x at the end of 2024. </li></ul>

The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x from 18.1x at the end of 2024.Prospective earnings for the index are down 2.3% so far this year, but we note that it has outperformed the broader S&amp;P 600 Small Cap Index, which is down 6.3%.Meanwhile, the S&amp;P SmallCap 600 Index is down 13.1% YTD, better than the WTR Consumer Products Index, despite relative earnings underperformance versus our index, as its prospective absolute P/E ratio compressed a lesser 1.2x to 15.3x from 16.5x at the end of 2024. 

WTR Consumer Products Index Lags S&P 600 YTD Despite Relative Earnings Outperformance

United States

The RealReal, Inc. owns and operates a members-only consignment marketplace for luxury goods. The Company specializes in curating and authenticating a full range of previously owned luxury products such as clothing, shoes, accessories, and jewelry that are sold on consignment. The RealReal markets its products and services throughout the United States.

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RealReal Inc (REAL US)

Worry About Fake Fakes Makes RealReal a Bad Bet

Product authentication and legitimacy are paramount for The RealReal (NASDAQ: REAL), which sells used luxury items. But our research indicates that...

J Capital Research

The RealReal, Inc - Expect Profitable HSD-LDD Top-Line Growth to Continue

4Q results in line with pre-announcement. REAL delivered $504 million in gross merchandise volume (GMV), $164 million in revenue, $11 million in...

Water Tower Research

The RealReal, Inc. - Not REALly Out of the Woods Yet; Initiating Coverage

We are initiating coverage of REAL. Post-COVID, almost all of the small-cap online apparel retailers have tried to restructure their businesses to...

Water Tower Research

A Defensive Portfolio Prepared For The Wealth Effect’s Reversal

The top 10% account for around 50% of consumer spending in the US. This insight looks at the sectors and companies that could win and lose from the...

Finimize Research

WTR Consumer Products Index Lags S&P 600 YTD Despite Relative Earnings Outperformance

The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x...

Water Tower Research

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