In his second "Executive Decision" segment of Mad Money Tuesday night, Jim Cramer spoke with Julie Wainwright, CEO of RealReal Inc. (REAL) , the online retailer that's come under fire from reports alleging fake goods are slipping through the company's authentication procedures.
Wainwright said her company has sold over 11.5 million items, 80% of which are to repeat customers. She said counterfeiting is always a problem and her company is constantly evolving their processes to combat it. She noted that the reports of counterfeit items stemmed from disgruntled former employees and the company has found no evidence of widespread problems.
The company uses a combination of data, technology and humans to combat fraud, Wainwright continued. A third of their items are jewelry and watches, which are overseen by gemologists, while all high risk items are scrutinized by an extra level of experts in their field.
When asked about their balance sheet and the fact that over 90% of the company's shares are sold short, Wainwright assured investors they have enough cash to take the company to profitability without needing more capital.
Let's check out the charts of REAL.
In the daily bar chart of REAL, below, you can see that we have just slightly more than four months of price action to work with. Prices are trading below the declining 20-day moving average line and below the rising 50-day moving average line.
The daily On-Balance-Volume (OBV) line bottomed out in August and shows a rise into late October. A rising OBV line only happens when buyers of a stock are more aggressive with heavier volume being traded on days when the stock closes higher. The OBV line has declined so far in November and that is not a constructive shift in direction.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in a bearish mode but the two moving averages that make up this indicator have begun to narrow and could generate a cover shorts signal in the near future.
In this Point and Figure chart of REAL, below, we do not have a lot of price history to work with like the daily bar chart (above). The chart is projecting a possible downside price objective of $11.
Bottom-line strategy: These two charts of REAL, above, do not give me enough technical confidence to be a buyer. Be a fussy shopper and let's look elsewhere for opportunities.