Zacks Small Cap Analysis – RERE: Continues to execute throughout the board. A number of progress alternatives on the horizon present upside to our forecast. – Cyber Tech

By Brian Lantier, CFA

NYSE:RERE

READ THE FULL RERE RESEARCH REPORT

Earlier than the market opened on March 11, ATRenew (NYSE:RERE) launched its fourth-quarter and full-year outcomes for 2025, demonstrating that the corporate’s deep client connection and market penetration can allow it to thrive even in difficult working environments. Regardless of smartphone shipments falling barely in China final yr, the corporate’s place because the premier vacation spot for customers to recycle their previous-generation smartphones enabled it to capitalize on robust improve cycles, significantly amongst Apple iPhone customers.

The Apple iPhone 17 was launched on September 19, and robust demand in China enabled Apple to reclaim its lead as the highest smartphone producer within the fourth quarter of 2025, with 22% market share. The recognition of this iPhone mannequin led to a powerful improve cycle amongst present iPhone customers who owned older fashions, reversing a development of declining gross sales within the Chinese language marketplace for Apple. The bottom mannequin iPhone 17 was priced at RMB5,999 to make sure it fell throughout the Chinese language authorities’s subsidy pointers for client electronics upgrades, together with smartphones priced underneath RMB6,000. At this level, it’s unclear whether or not Apple’s resurgence within the Chinese language market is sustainable or whether or not this was merely a bump pushed by a larger-than-normal improve cycle coinciding with smartphone subsidies for fashions priced underneath RMB6,000.

Whole internet revenues at ATRenew jumped 29% from the identical interval of 2024 to RMB6.25 billion ($894 million) and have been up 21.5% sequentially from the third quarter of 2025 due largely to the surge of iPhone 17 gross sales which led to giant variety of trade-ins of older iPhone fashions and a number of other android mannequin updates from firms like Oppo, Huawei and Vivo. Whole revenues for ATRenew exceeded our forecast by 2.2%, or RMB134 million, principally attributable to elevated unit volumes and better pricing throughout the total spectrum of pre-owned smartphones, pushed, partly, by greater reminiscence prices. The corporate’s internet service revenues have been up 8.8% yr over yr within the fourth quarter of 2025 however basically flat sequentially. Energy in some segments of this enterprise (significantly the corporate’s gold enterprise) might have been offset by weak point in client spending on different objects, corresponding to luxurious items.

The corporate’s 1P enterprise (First Get together gross sales, the place ATRenew acts because the retailer of products to customers) posted a gross margin of 13.7% within the quarter, up from 12.5% a yr in the past. The corporate attributed this enchancment to effectivity positive factors in consumer-to-business gross sales and a extra diversified retail channel gross sales combine.

The steadiness of the corporate’s working bills have been roughly consistent with the upper quantity of gross sales, and because of a slight enchancment in margins, ATRenew reported GAAP internet revenue of RMB130.3 million for the quarter ($18.6 million). After adjusting for non-cash share-based compensation bills of RMB9.1 million within the quarter and small amortization of intangibles (RMB783 thousand), adjusted non-GAAP revenue was reported at RMB140.1 million or $20.0 million for the quarter or $0.08/ADS, consistent with our projections.

We consider that traders are more likely to revalue ATRenew throughout 2026, with a watch towards 2027, and when there may be better readability concerning the following iPhone launch dates. The inventory has carried out extraordinarily effectively over the previous six months, roughly doubling in that timeframe, and we consider there may be upside to our forecasts within the again half of 2026, however in the meanwhile, we’re leaving our goal unchanged at $8.00/ADS. With the inventory buying and selling at simply 13.6 instances our 2026 adjusted earnings per ADS estimate and providing a 1.8% dividend, we consider ATRenew presents a novel small-cap progress worth out there.

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