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The RealReal’s $270 Million IPO Eyes Valuation of Nearly $1.5 Billion

The RealReal Inc. has set the terms for its $270 million initial public offering, with the per share offering price expected at between $17 and $19.

The $18 mid-point range would give the company a valuation of about $1.49 billion, or $1.57 billion at $19 a share, with slightly more than 82.7 million shares outstanding. If the company were to follow Revolve, the most recent fashion IPO from earlier this month, that valuation could go far higher. In the case of Revolve, shares of the e-tail platform priced at $18 per share, but then rose as high as $35 in intraday trading, or 94 percent above the IPO price.

While not all IPOs do well–on-demand transportation firm Lyft Inc.’s shares are trading below its opening day trading price, for example–fashion IPOs seem to be holding their own.

In addition to Revolve, Levi Strauss & Co. has been holding steady at the $22 to $23 range, slightly above its first-day closing price of $22.41. Stocks in general have seen a bit of volatility in the past few weeks as investors try to determine what the fallout will be from all the tariff hikes threatened and imposed by the Trump administration.

Following the completion and success of the Revolve IPO and what it may mean for The RealReal, Matthew Kennedy, senior IPO market strategist for Renaissance Capital, a provider of IPO exchange-traded funds, described it as a “positive sign” for investor receptivity when the luxury consignment platform takes its turn in the IPO arena.

The San Francisco-based luxury resale marketplace plans to sell 15 million shares and raise $270 million. The company said in its regulatory filing with the Securities and Exchange Commission on Monday that it expects net proceeds to be $245.8 million, or $283.5 million if underwriters elect to exercise their option to purchase additional shares.

“We intend to use the net proceeds from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures. In addition, 1 percent of the net proceeds will be used to fund The RealReal Foundation, a Delaware non-profit organization formed to engage in charitable activities,” the company said in the filing.

Once shares begin floating, the company’s stock will trade under the symbol “REAL” on the Nasdaq Global Select Market.

For the year ended Dec. 31, 2018, the company posted a net loss of $84.7 million, on revenues of $207.4 million. For the three months ended March 31, 2019, the net loss was $26.6 million, on revenues of $69.3 million.