Why The RealReal Stock Popped on Thursday
Key Points
The RealReal is replacing high-interest debt due in 2029 with lower-cost debt not due till 2033.
The luxury goods resale specialist is entering its third straight year of positive free cash flow -- and could double FCF next year.
- 10 stocks we like better than RealReal ›
The RealReal (NASDAQ:REAL) stock jumped 11.5% through 12:15 p.m. ET Thursday after the second-hand luxury goods online marketplace announced it is rolling over its debt.
Image source: Getty Images.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Real talk
According to the latest data from S&P Global Market Intelligence, $1.1 billion-RealReal is carrying just over $463 million in debt against $119 million in cash reserves. The debt's not coming due anytime soon. Still, perhaps out of a desire to head off rising interest rates, RealReal is getting ahead of the problem now and signing a new $150 million senior secured term loan and a new $25 million senior secured revolving credit facility.
The new debt will charge only 5.75% interest, a significant improvement over RealReal's current "4.25%/8.75% PIK/Cash Pay Senior Secured Notes due 2029," which the company intends to pay off with the new cash. Moreover, the new loans will not come due until October 2033.
Management confirms that the goal of the transaction is "reducing overall interest costs and further extending our maturity profile." Ultimately, RealReal's objective is to reduce its total debt load to $150 million -- a reduction of more than two-thirds.
An interesting opportunity
Valued at $1.2 billion after today's run-up, RealReal stock isn't technically "profitable" -- it's actually reported earnings calculated under generally accepted accounting principles (GAAP) losses every year of its existence. Its free cash flow, however, turned positive in 2024 and has been growing steadily since.
Valued at a price-to-free cash flow ratio of 34x today, the stock's not obviously cheap. But with debt levels coming down and FCF forecast to more than double next year, I can see why investors are starting to warm to the stock.
The RealReal could be a real buying opportunity today.
Should you buy stock in RealReal right now?
Before you buy stock in RealReal, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and RealReal wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $380,579!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,359,789!*
Now, it’s worth noting Stock Advisor’s total average return is 934% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of October 15, 2026.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Recommended Articles
