Research from Water Tower Research, Water Tower Research

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.

Research from Water Tower Research

Equity Research Firm

Equity Bottom-Up

<ul><li>Trading at a discount to REAL. ThredUp (TDUP) and The RealReal (REAL) are largely in the same business and have similar business models.</li><li>Based on FactSet consensus, TDUP is currently trading at less than 1x NTM revenue, while REAL is trading at ~2.5x. TDUP has very modest debt and its US business has been adjusted EBITDA profitable for the past five consecutive quarters, which gives it a leg up versus where REAL was a year ago.</li><li>Now, post the European divestiture, when management can devote both time and capital to the US business alone, the focus should be on top-line growth. </li></ul>

Trading at a discount to REAL. ThredUp (TDUP) and The RealReal (REAL) are largely in the same business and have similar business models.Based on FactSet consensus, TDUP is currently trading at less than 1x NTM revenue, while REAL is trading at ~2.5x. TDUP has very modest debt and its US business has been adjusted EBITDA profitable for the past five consecutive quarters, which gives it a leg up versus where REAL was a year ago.Now, post the European divestiture, when management can devote both time and capital to the US business alone, the focus should be on top-line growth. 

ThredUp, Inc. - Time to Look at ThredUp Once Again; Initiating Coverage