The RealReal, Inc. (REAL) shares rose nearly 4% during Tuesday's pre-market hours after Baird initiated coverage on the stock at Outperform with a $23.00 price target and Wells Fargo reiterated its Overweight rating and raised its price target from $20.00 to $25.00 per share.

Key Takeaways

  • RealReal shares moved higher during Tuesday's session after two analysts weighted in favorably on the stock.
  • The analysts believe that RealReal shares are appropriately discounted and see improvements in supply and gross merchandise value trends.
  • The stock moved further into overbought territory, but looking at technical indicators, the intermediate-term trend remains bullish.

Baird analyst Mark Altschwager believes that RealReal shares are appropriately discounting elevated near-term risk factors, which sets up an attractive risk/reward profile during a recovery in luxury goods. At the same time, Wells Fargo analyst Ike Boruchow sees improvements in supply and gross merchandise value trends, and Piper Sandler analysts said last week that they expect gross merchandise volume to accelerate during the second quarter of 2021.

In early December, the company provided a shareholder update indicating that new buyers rose a record 24% year over year in November. Vendor supply units shipped also rose 121% year over year in a further sign of healthy demand despite the pandemic.

Chart showing the share price performance of The RealReal, Inc. (REAL)
TradingView.com

From a technical standpoint, the stock moved higher during Tuesday's session after a bullish engulfing on Monday. The relative strength index (RSI) moved further into overbought territory with a reading of 77.06, but the moving average convergence divergence (MACD) remains in a bullish upswing. These indicators suggest that the stock could see some near-term consolidation before resuming its trend higher.

Gross merchandise value (GMV) is the total value of merchandise sold over a given period of time through a customer-to-customer (C2C) exchange site. It is a measure of the growth of the business or use of the site to sell merchandise owned by others.

Traders should watch for consolidation above prior highs of around $18.00. If the stock rebounds from these levels, traders should watch for a move to upper trendline resistance at around $21.00. If the stock breaks down, traders could see a move to retest the 50-day moving average at $14.73 or trendline support at $13.00, although that seems less likely to occur given the fundamental strength.

The Bottom Line

The RealReal shares moved higher during Tuesday's session after two analysts weighed in favorably on the stock. While the stock moved further into overbought territory, the intermediate-term trend remains bullish.

The author holds no position in the stock(s) mentioned except through passively managed index funds.