What happened
Shares of The RealReal (REAL 2.89%), a retailer of second-hand, high-end designer goods, rose 13% in June according to data from S&P Global Market Intelligence. But that's not the full story, since the shares were, at one point in the month, up by nearly 30%. And they have continued to fall since the end of the month as well. So the monthly gain isn't really a telling sign of anything, it's more of a snapshot taken in the middle of a bigger event.
So what
The thing is, this up and down price action isn't really that unusual for The RealReal over the last year or so. In fact, over that span it rose around 100% at one point in 2020 and then lost it all before starting to rise again in May of this year. All along the way there were fairly swift and dramatic price changes. This is not the type of stock a risk-averse investor should be looking at right now.
Image source: Getty Images.
That's not surprising, though, given that The RealReal has gotten caught up in the Reddit message board craze that is currently taking investors on a wild ride of often shocking proportions. The truly frightening thing about all of this is that much, perhaps most, of the speculation here is emotionally driven.
That said, in early June The RealReal provided a monthly update on its business and there is progress being made. The company's May sales, for example, were up 85% year over year and 50% compared to May 2019. The early July update, with data from June, showed similar success, with sales up 67% year over year and up 54% compared to June 2019. The only problem is that the company's adjusted first-quarter loss was $0.49 per share. That suggests that The RealReal is still trying to build its business and that sustained profitability isn't yet at hand. To reiterate, this is not a great investment option for conservative investors.
Now what
Shares of The RealReal have been on a rollercoaster ride over the past year thanks to the Reddit madness that has engulfed Wall Street. Most investors would be better off as spectators here than shareholders; it's just too hard to tell which way the emotional winds will blow at any given time. That said, The RealReal is building an interesting business that appears to be gaining some traction. The ups and downs from the Reddit boards is making that harder to see, but for more aggressive investors it could be worth digging into the long-term story here. But even then a great deal of caution is in order given that animal spirits are running hard and fast with this retailer's stock of late.
