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Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the The RealReal, Inc. (NASDAQ:REAL) share price has soared 298% in the last 1 year. Most would be very happy with that, especially in just one year! It's also good to see the share price up 196% over the last quarter. Unfortunately the longer term returns are not so good, with the stock falling 18% in the last three years.
So let's assess the underlying fundamentals over the last 1 year and see if they've moved in lock-step with shareholder returns.
Check out our latest analysis for RealReal
Because RealReal made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
RealReal grew its revenue by 2.5% last year. That's not great considering the company is losing money. In contrast, the share price took off during the year, gaining 298%. The business will need a lot more growth to justify that increase. It's quite likely that the market is considering other factors, not just revenue growth.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on RealReal's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's good to see that RealReal has rewarded shareholders with a total shareholder return of 298% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 8% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand RealReal better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for RealReal (of which 1 is significant!) you should know about.
We will like RealReal better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.