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With the drawdown that we’ve seen over the last ~2 months, from software stocks selling off to Trump launching a war that almost no one wanted, we were hoping that strong earnings from our holdings would cushion the blow from the onslaught of selling.

However, during times of uncertainty, when oil prices, rates, and inflation expectations spike, everyone’s “grab a life jacket” mentality hasn’t really saved anyone yet. Despite many of our holdings reporting good, or upbeat, earnings, they’ve largely sold off along with the rest of the market.

Part of what makes investing great is being tested by turbulent times that can either allow mispricings to be exploited or test your original thesis to uncover any exposure holes.

Below, we’re going to go over three companies we currently own, how earnings performed, and potentially introduce new ideas for investors looking to deploy capital into beaten-down stocks.

Below, we’re going to go over the names in that order in case you want to skip around.

The RealReal (REAL)
KITS Eyewear (KITS-TO)
WW International (WW)

With that, let’s get started.

The RealReal (REAL)

The RealReal has been an interesting one for us, considering we shared our original note on April 17th, 2025, when everyone was dealing with the Liberation Day fallout and retraction when Trump realized he had no leverage.

The price of the stock was just ~$5, and we highlighted why everyone was getting this retail name wrong by misunderstanding its tariff exposure and change of strategy over the last few years.

We’ve included the link below and highly encourage anyone who would like to get up to speed on the name to read it, because we won’t be “reiterating” the same stuff over again in this post.

REAL: A Misunderstood Tariff Beneficiary Hiding in Plain Sight

Why we've decided to look at this opportunity after an >50% drawdown from recent highs

www.cedargroveresearch.com/p/the-realreal-real-a-misunderstood-tariff-beneficiary

Since that post, the stock rallied >3x to almost hit $18/share last year on the back of strong topline growth, margin expansion, and what seems to be great tailwinds that further hurt traditional luxury but opened the door wider for platforms like REAL.

However, this year has been tough for anything consumer/retail-related, as higher oil prices and rates stoke fears in reduced consumer discretionary spending (a theme for the three names we talk about in this post), and thus, drawing down on REAL’s stock price.

Despite this pain, earnings were great (another beat and raise), and underlying trends supported our original thesis of continued topline growth through additional unlocked GMV and margin expansion through operational leverage.

Below are our takeaways from earnings, and why we still think people are wrong to throw out this baby with the bathwater like they did last year.

Going over the highlights.

GMV for the year grew an astounding 16.4% y/y, with jewelry and watches growing 23.5% y/y → important as REAL grows into higher ticketed items.
Total sales grew >15% y/y (something not seen since FY’22), and encouraging considering that the company was guiding to just 7.9% y/y growth at the start of 2025.
When it comes to unlocking supply (the main way this model works), buyers who were also consignors grew to 53.9% → repeat inventory coming through REAL.
Gross margin continues to expand (74.6% → highest in public company history), and operating expenses continue to drop as improvements to logistics and sourcing continue to unlock additional GMV and throughput.
Profitability inflection continues with adjusted EBITDA margin expanding to 3.6% of sales in the year and finally turned FCF positive (~$5 million for the year / ~$43 million for the quarter.
Lastly, active buyers hit a new all-time high of 1.056 million (those who purchased in the last 12 months), and the AOV jumped to $594 → the second highest y/y growth since going public.