MeritValue

TheRealReal, Inc.

REALdata completeness 88%9 fiscal years on file
The thesis, from the filings

TheRealReal, Inc. earns about -323% on equity, below its ~9% cost of capital, but has diluted owners by 27% over 5 years — no moat visible in the numbers. The estimate methods put fair value between $3.22 and $3.38 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$467.7M1$603.5M2$549.3M3$600.5M3$692.8M3
Net income−$236.1M4−$196.4M5−$168.5M6−$134.2M6−$41.8M6
Operating cash flow−$142.2M7−$91.6M8−$61.3M9$26.8M9$37M9
Capital expenditure$37.5M10$22.9M11$29.2M12$14.2M12$18.6M12
Free cash flow (derived)−$179.6M7−$114.4M8−$90.4M9$12.6M9$18.4M9
Total debt—————
Cash & equivalents$418.2M13$293.8M14$175.7M15$172.2M15$151.2M15
Diluted shares91.4M95.9M101.8M107.9M116.5M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
−$35.66
your share of equity
Profit it earned you last year
−$3.59
Free cash flow it threw off
$1.58
Debt you’d be carrying
—

10 shares is a claim on −$35.66 of net worth that earned you −$3.59 and generated $1.58 of cash last year.

iii. Is this a good business?
Moat signal · return on equity
-323% avg · 5y
FY21 -323%FY22 —FY23 —FY24 —FY25 —

It earned about -323% on equity against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
+27% shares · 5y

Share count is up 27% over 5 years — owners have been diluted. Worth asking what they got for it.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 2 estimate methods that apply put fair value between $3.22 and $3.38 a share. They rest on different assumptions, so where they diverge is the story.

DCF · Growth Exit 10Y
$3.38
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth5.0%
  • fcfBase$12.6M
DCF · Growth Exit 5Y
$3.22
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth5.0%
  • fcfBase$12.6M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years5.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $3.22
The three cases
Bear0.0%$2.84
Base5.0%$3.22
Bull10.0%$3.66

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 5.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001573221-24-000030 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001573221-25-000013 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001573221-26-000010 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001573221-24-000030 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001573221-25-000013 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001573221-26-000010 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001573221-24-000030 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001573221-25-000013 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001573221-26-000010 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001573221-24-000030 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001573221-25-000013 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001573221-26-000010 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001573221-24-000030 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2022-12-31 · accession 0001573221-25-000013 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2023-12-31 · accession 0001573221-26-000010 (CashAndCashEquivalentsAtCarryingValue)