Revolve is still undervalued and mispriced by Wall Street simply because the majority of analysts who cover it do not understand the nuances of the company. Heck, most of them are still figuring out what they sell. This isn’t surprising. Revolve’s demographic is female Millennial and Gen Z consumers. The demographic of Wall Street are typically white Gen X males like this analyst covering the company.

Here is a video of one analyst giving his assessment of Revolve. This is a sound analysis from a book value perspective but even he admitted: “I am not a Gen Z’er or Millennial so it is too fashionable for me, I am old school.” Were no female contributors not available to give their opinion? If you were to ask his wife or daughter, they probably would be able to give a more accurate description of what the company does.

The analyst said, “I don’t get this kind of retail,” and “I went to their website because I had to figure out what they sell.” Can you imagine a professional analyst covering Tesla or Apple saying they had to go on their website to figure out what they sold? This seems shocking but not surprising. The majority of people on Wall Street have a limited scope of expertise. It is plagued by herd mentality and an inability to think outside the box. Regurgitating financial statements is not enough. What many on Wall Street are missing on Revolve is that they represent the future of e-commerce fashion retail. This may be obvious for someone born after 1980 but not so much for out of touch Wall Street.

Revolve from a financial perspective is doing well and has a positive outlook, but that is only half the story. Here’s a summary and what many analysts are missing. Revolve is a luxury lifestyle/fashion brand located in Los Angeles (specifically Cerritos) California. Los Angeles is emerging as the fashion capital of the United States. The “Big Four” global fashion capitals are widely considered London, Milan, France, and New York. Fashion is to New York as Big Tech is to Silicon Valley. Any legitimate luxury fashion brand is located on Fifth Ave.

Los Angeles has been emerging as a growing fashion hub where it will eventually become the 5th global fashion capital. I am no expert in fashion, so please take whatever I write with a grain of salt however it doesn’t take much research or an open mind to learn this trend by reading any random reputable fashion blog.

Reasons for this shift:

• Instagram’s popularity has allowed emerging designers to showcase their work much more easily and LA has become the preferred destination of choice.
• Celebrity brands/culture has grown (fueled by social media) much more popular within the past decade. Look at Robyn Rihanna Fenty, who launched her lingerie line in 2018 called Savage X Fenty. The company is headquartered in El Segundo California. Rihanna is now a billionaire and has a higher net worth than the majority of rappers she collaborated on songs with this past decade.
• Los Angeles culturally is considered more about wellness and leisure. This more health-conscious laid back lifestyle is trending upwards and becoming more popular.

What Revolve has done in a short amount of time is quite remarkable. They may become the first true American luxury fashion brand outside of New York. Los Angeles’s growth in fashion also coincides with it becoming an emerging tech hub as well. This isn’t just about a fad fashion retailer but a growing fashion empire that is attracting the most influential social media influencers and designers in the fashion space. This shift just happens to coincide with retail spending rapidly moving online. I like to make bets on trends and in my opinion Revolve is grossly underpriced. I see Revolve priced similar to where Lululemon was priced in 2017. I will gladly hold onto my shares of RVLV and watch it appreciate as Wall Street figures out what they do as a business.