RealReal (NASDAQ:REAL) versus Alibaba Group (NYSE:BABA) Critical Survey

Alibaba Group (NYSE:BABA) and RealReal (NASDAQ:REAL) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Valuation and Earnings

This table compares Alibaba Group and RealReal”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alibaba Group	$1,044.97 billion	0.26	$15.02 billion	$4.13	26.45
RealReal	$692.84 million	2.32	-$41.80 million	($0.67)	-19.21

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Alibaba Group and RealReal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alibaba Group	0	6	13	2	2.81
RealReal	1	2	6	0	2.56

Alibaba Group presently has a consensus price target of $182.89, suggesting a potential upside of 67.42%. RealReal has a consensus price target of $17.50, suggesting a potential upside of 35.98%. Given Alibaba Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe Alibaba Group is more favorable than RealReal.

Profitability

This table compares Alibaba Group and RealReal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alibaba Group	7.00%	4.79%	2.80%
RealReal	-1.42%	N/A	-5.09%

Insider & Institutional Ownership

13.5% of Alibaba Group shares are owned by institutional investors. Comparatively, 64.7% of RealReal shares are owned by institutional investors. 12.5% of Alibaba Group shares are owned by insiders. Comparatively, 2.7% of RealReal shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Alibaba Group has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500. Comparatively, RealReal has a beta of 2.86, suggesting that its stock price is 186% more volatile than the S&P 500.

Summary

Alibaba Group beats RealReal on 12 of the 15 factors compared between the two stocks.

About Alibaba Group

Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others. It operates Taobao, a digital retail platform; Tmall, a third-party online and mobile commerce platform; Alimama, a monetization platform; 1688.com and Alibaba.com, which are online wholesale marketplaces; AliExpress, a retail marketplace; Lazada, Trendyol, and Daraz that are e-commerce platforms; Freshippo, a retail platform for groceries and fresh goods; and Tmall Global, an import e-commerce platform. The company also operates Cainiao Network logistic services platform; Ele.me, an on-demand delivery and local services platform; Koubei, a restaurant and local services guide platform; and Fliggy, an online travel platform. In addition, it offers pay-for-performance, in-feed, and display marketing services; and Taobao Ad Network and Exchange, a real-time online bidding marketing exchange. Further, the company provides elastic computing, storage, network, security, database, big data, and IoT services; and hardware, software license, software installation, and application development and maintenance services. Additionally, it operates Youku, an online video platform; Quark, a platform for information search, storage, and consumption; Alibaba Pictures and other content platforms that provide online videos, films, live events, news feeds, literature, music, and others; Amap, a mobile digital map, navigation, and real-time traffic information app; DingTalk, a business efficiency mobile app; and Tmall Genie smart speaker. The company was incorporated in 1999 and is based in Hangzhou, the People's Republic of China.

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.