Revolve (RVLV) Stock Forecast & Price Target

Revolve Group Inc. demonstrated a solid performance in the fourth quarter, achieving a year-over-year revenue growth of 14%, driven by improved customer engagement and a favorable selling environment. The company saw active customer growth of 5% year-over-year, reaching a total of approximately 2.668 million, which surpasses market expectations. Management's guidance for first-quarter gross margin stands at 52.2%-52.7%, reflecting a positive trajectory for profitability, alongside an anticipated increase in both the number of brands and distinctive products offered.

Revolve Group Inc experienced a significant year-over-year decline in free cash flow, dropping approximately 54% to around $18 million in the fourth quarter, largely due to unfavorable working capital investments and inventory management. Despite maintaining a gross margin of 54.6% in the REVOLVE segment, which fell short of expectations, the company witnessed a minor decline in average order value (AOV) by 1% to $301, compounding concerns about its pricing power and product mix, particularly at FWRD. A projected earnings per share of $0.40, given stagnant top-line growth and margin pressures, suggests a potential downside to the stock price based on prevailing market multiples.