By Brian Lantier, CFA
NYSE: RERE
READ THE FULL RERE RESEARCH REPORT
ATRenew Reports Exceptionally Strong Second Quarter 2026 Results
Before the market opened on August 20, ATRenew (NYSE:RERE) released its second-quarter results for 2026, which continue to show the strong pricing environment that the company is experiencing for its products. Improved branding with consumers, premium product offerings, higher perceived value of its products, and reduced friction in the system for buyers and sellers have helped the company navigate a difficult consumer market in China.
Price hikes for new smartphones and computers, tied to rising memory costs for several leading brands in China, impacted overall demand for new devices in the second quarter, but this rising price environment appears to have led to increased demand for the company’s premium pre-owned smartphone inventory, which is viewed as a relative value compared to new models. The company continues to invest in consumer branding and expand customer delivery services to drive growth, even as the broader domestic smartphone market in China has contracted amid higher prices and an uneven economic backdrop for consumers. Apple continues to invest heavily in gaining market share in China, which benefits ATRenew as Apple products tend to have higher residual values.
Total net product revenues at ATRenew jumped 35.9% from the same period of 2025 to RMB6.2 billion ($913million) and were up 8% sequentially from the first quarter of 2026. The trend of consumers seeking value by choosing high-quality, renewed phones over higher-priced new ones appears to have been a key driver.
However, despite the strong performance in a challenging operating environment, investors appear to be laser-focused on the company's Q3 guidance, with revenue in the range of RMB6.34 billion to RMB6.44 billion, about 3.5% below our previous estimate for the quarter. We believe that the new Q3 guidance also reflects the company’s best guess at the impact of the staggered iPhone 18 launch and what that means for the smartphone market in China.
Model adjustments: We have adjusted our model to reflect the very strong Q2 results and the company’s guidance for Q3 revenues of between RMB6.34 billion and RMB6.44 billion. As a result of this updated guidance, our total revenue forecast for 2026 is now RMB26.2 billion (down slightly from a previous estimate of RMB26.4 billion), representing roughly 25% topline growth for the year. We have updated our 2027 model as well but recognize that the quarterly breakdown of these estimates could vary significantly depending on the timing of Apple’s iPhone 18 base model launch and the future of the national subsidy program. We believe that we are being conservative with our growth assumptions and will adjust our expectations as we gain clarity on demand in the back half of 2026.
Our full-year adjusted earnings per ADS estimate remains $0.40/ADS, and our 2027 forecast is $0.49/ADS. We are leaving our target unchanged at $8.00/ADS. With the stock trading at just about 8 times our 2027 adjusted earnings per ADS estimate, we believe ATRenew offers a unique small-cap growth value in an expensive market.
We would encourage investors to review our full updated research report on ATRenew that covers industry trends and international expansion opportunities.
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