We came across a bullish thesis on ATRenew Inc. on 21 Street Capital’s Substack. In this article, we will summarize the bulls’ thesis on RERE. ATRenew Inc.’s share was trading at $6.11 as of February 25th. RERE’s trailing and forward P/E were 38.13 and 8.08 respectively according to Yahoo Finance.
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ATRenew (RERE) is the dominant player in China’s pre-owned consumer electronics recycling market, operating the largest network in an overlooked but structurally attractive niche. The company has built a vertically integrated platform spanning sourcing through AHS Recycle, B2B distribution via PJT Marketplace, and B2C sales through Paipai, transforming what was historically a fragmented and opaque ecosystem into a standardized marketplace with transparent pricing and quality assurance.
Its scale—over 2,000 stores and eight operation centers across nearly 300 cities—creates significant economies of scale, indirect network effects, and a powerful data flywheel that improves pricing accuracy and operational efficiency over time. Strategic partnerships with major platforms and manufacturers such as JD.com and Apple further reinforce supply pipelines and competitive positioning, while proprietary inspection and data-cleansing technologies establish industry benchmarks that are difficult for competitors to replicate.
Despite operating in a capital-intensive sector with thin margins, ATRenew has achieved strong financial momentum, with revenue growing over 27% and earnings expanding more than fourfold, supported by automation initiatives and improving scale economics that are driving margin expansion and rising returns on invested capital.
The long-term growth runway remains substantial, as China’s mobile device recycling rate is estimated at only around 2%, leaving significant penetration potential, while expansion into multi-category recycling and selective international opportunities provides additional optionality.
However, the market continues to undervalue the company due to perceptions of recycling as a low-quality, unfamiliar industry, resulting in modest valuation multiples relative to its growth profile and competitive advantages. With continued earnings execution, improving profitability, and potential sentiment rerating, ATRenew offers a compelling asymmetric opportunity, with meaningful upside potential over the next several years driven by sustained transaction growth, operating leverage, and multiple expansion.
Previously, we covered a bearish thesis on eBay Inc. (EBAY) by Kostadin Ristovski, ACCA in November 2024, which highlighted the company’s flat GMV growth, take-rate dependence, and limited expansion despite strong cash flow. EBAY’s stock price has appreciated by 38.74% since our coverage. 21st Street Capital shares a contrarian view but emphasizes on ATRenew Inc.’s growth runway and undervaluation within recommerce.
ATRenew Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held RERE at the end of the third quarter which was 15 in the previous quarter. While we acknowledge the risk and potential of RERE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RERE and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
