Critical Analysis: RealReal (NASDAQ:REAL) and RLX Technology (NYSE:RLX)

RealReal (NASDAQ:REAL) and RLX Technology (NYSE:RLX) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for RealReal and RLX Technology, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RealReal	1	2	5	1	2.67
RLX Technology	0	2	0	0	2.00

RealReal currently has a consensus price target of $18.06, suggesting a potential upside of 92.87%. RLX Technology has a consensus price target of $2.50, suggesting a potential upside of 12.87%. Given RealReal’s stronger consensus rating and higher probable upside, equities research analysts plainly believe RealReal is more favorable than RLX Technology.

Profitability

This table compares RealReal and RLX Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RealReal	-6.03%	N/A	-0.63%
RLX Technology	23.27%	5.74%	5.28%

Insider and Institutional Ownership

64.7% of RealReal shares are held by institutional investors. Comparatively, 22.7% of RLX Technology shares are held by institutional investors. 9.0% of RealReal shares are held by insiders. Comparatively, 53.4% of RLX Technology shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares RealReal and RLX Technology”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RealReal	$692.84 million	1.61	-$41.80 million	($1.09)	-8.59
RLX Technology	$566.11 million	6.15	$131.83 million	$0.09	24.61

RLX Technology has lower revenue, but higher earnings than RealReal. RealReal is trading at a lower price-to-earnings ratio than RLX Technology, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

RealReal has a beta of 2.67, suggesting that its share price is 167% more volatile than the S&P 500. Comparatively, RLX Technology has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

Summary

RLX Technology beats RealReal on 8 of the 15 factors compared between the two stocks.

About RealReal

The RealReal, Inc. operates an online marketplace for resale luxury goods in the United State. The company offers various product categories, including women's fashion, men's fashion, jewelry, and watches. It primarily sells products through online marketplace and retail stores. The company was incorporated in 2011 and is headquartered in San Francisco, California.

About RLX Technology

RLX Technology Inc., together with its subsidiaries, engages in the manufacture and sale of e-vapor products in the People's Republic of China and internationally. It serves partner distributors and retail outlets. The company was founded in 2018 and is headquartered in Beijing, China.