Alibaba Group (NYSE:BABA – Get Free Report) and RealReal (NASDAQ:REAL – Get Free Report) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.
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% |
Risk and Volatility
Alibaba Group has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500. Comparatively, RealReal has a beta of 2.86, indicating that its share price is 186% more volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent recommendations for Alibaba Group and RealReal, as reported 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 currently has a consensus target price of $183.26, indicating a potential upside of 77.43%. RealReal has a consensus target price of $17.50, indicating a potential upside of 21.66%. Given Alibaba Group’s stronger consensus rating and higher possible upside, equities analysts clearly believe Alibaba Group is more favorable than RealReal.
Institutional and Insider 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 company insiders. Comparatively, 2.7% of RealReal shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Alibaba Group and RealReal”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Alibaba Group | $148.40 billion | 1.73 | $15.02 billion | $4.13 | 25.01 |
| RealReal | $692.84 million | 2.59 | -$41.80 million | ($0.67) | -21.47 |
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.
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.
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