ATRenew Is Quietly Building Asia’s Circular Economy Giant

Shares of ATRenew (RERE) jumped more than 11% Wednesday following another great earnings report. I’ve been researching their latest filings thoroughly, and I believe this stock can go even higher.

ATRenew has been on my radar for a while now, ever since I heard stories from friends buying like-new iPhones in China for nearly half the retail price. I got tempted. At first, the whole thing felt too good to be true. I started digging into app and the company behind it, and what I discovered completely shifted my perspective from consumer curiosity to a potential unique investment idea.

It turns out they are a tech-savvy, highly credible and profitable reseller that is growing rapidly. With the broader macroeconomy slowing down, people are naturally becoming a lot more cautious about their spending. Because of that shift, the circular economy could easily be the next massive blue ocean market in Asia.

A bit more background on this company. Unlike traditional C2C apps, ATRenew operates as a platform-governed dealer that refurbishes and provides warranties on used tech like smartphones and computers. According to its corporate website, the company runs the Paipai Marketplace, which is consumer-facing, and the PJT Marketplace for its B2B business. This operates alongside thousands of offline physical stores where customers can drop off their old phones for recycling or purchase certified pre-owned ones.

What excited the market is not its business model but its continued double digits growth year over year. Now let’s dive into ATRenew Q1’26 financials. Overall, the company beat analysts' expectations on both topline and bottomline. Total net revenues surged 32.4% YoY to RMB6.16 billion ($893.0 million), comfortably beating the company’s high-end guidance and Wall Street consensus. To put that in perspective, the institutional consensus compiled by Seeking Alpha had modeled Q1 revenue at $859.83 million and an EPS of $0.07 per share. Instead, ATRenew's GAAP income from operations jumped dramatically by 154.9% to RMB 185.3 million ($25.7 million). Net income skyrocketed 215.7% to RMB 135.1 million ($19.6 million). This brought their non-GAAP EPS to $0.13 per share, significantly beating consensus $0.07 per share. On top of that, total consumer product transactions hit 10.8 million items for the quarter, up from 9.5 million in Q1 2025.

Why is it succeeding? For two reasons, its core business remains strong and profitable and at the same time, its second growth curve (multi-category business) has officially taken off.

The company is not just relying on smartphone sales. Instead, ATRenew is aggressively expanding into non-electronic verticals, specifically high-margin segments like gold, luxury goods, and watches. For Q1’26, the overall GMV for the multi-category recycling business skyrocketed by 81.5% YoY. Gold recycling is absolutely booming right now, thanks to surging gold prices. Secondhand luxury goods recycling also grew by 58.8% YoY in GMV. This shows they are successfully capturing higher-order consumer spending shifts, and honestly, this is huge.

Luxury goods reselling is another multi-billion dollar industry. Niche companies like The RealReal (REAL) or Vestiaire Collective have built massive businesses just by reselling designer bags and clothings. If ATRenew can tap into this massive industry and take a meaningful piece of the market share, the upside is massive. They already have a huge advantage because Asian clients genuinely trust their brand and their massive physical footprint is making purchasing experience very easy. According to its earnings call, Kerry Chen, CEO of ATRenew said, “by the end of March 2026, ATRenew had deployed multi-category recycling capabilities into 966 physical AHS stores”. That is an increase of nearly 300 locations compared to the same time last year, proving just how quickly they can scale this service by leveraging their existing retail footprint. The company, as of March of 2016, has 2156 AHS stores, according to its website.

As a matter of fact, even global tech giants like eBay (EBAY) are doubling down on this market. eBay has poured capital into building massive physical verification hubs for their own "Authenticity Guarantee" program, which shows just how lucrative this space really is. However, based on my research, ATRenew's biggest regional competitors for luxury products in Asia are mostly private companies. Because of this, ATRenew is uniquely positioned as the only major, pure-play circular economy and luxury/electronics reseller in Asia that is publicly traded and carries a long, proven track record. At the end of the day, trust and convenience are the only things customers look for when purchasing used items. One call out though is a competitor called ZhuanZhuan, a Tencent (TCEHY)-backed Chinese secondhand e-commerce platform, is also considering an IPO, but no date has yet been announced.

Coming back to its core business, smartphone sales remain ATRenew's number one growth driver. In Q1 2026, net product revenues (which are predominantly secondhand smartphones) surged 34.4% YoY to RMB 5.73 billion. Historically, ATRenew acted as a wholesaler, source phones from consumers but sell it in bulk to merchants, but now the company is pivoting the sale more towards end users directly through its own stores and various new media live-streaming channels. By removing the middleman, the company has improved its 1P gross product margin to nearly 16%, hence the impressive bottom line beat I mentioned above.

Overall, ATRenew has evolved far past its days as a simple secondhand electronic matching site. According to policy briefings and analyses surrounding China’s 15th Five-Year Plan, China is placing significantly greater emphasis on green development, resource efficiency, and the circular economy as part of its long-term national strategy. The plan even sets aggressive quantitative targets to be achieved by 2030 in terms of carbon consumption. Therefore, benefiting from a powerful macro tailwind in China's national trade-in circular economy initiatives, the market is defining ATRenew as the major circular economy player in Asia. Even with today's double-digit breakout, the stock remains fundamentally mispriced against its underlying compounding growth rate.

At its current share price of around $5.10, ATRenew trades at a trailing non-GAAP P/E ratio of roughly 19.5x. For a company growing its topline revenue at a 32.4% YoY and exploding its bottom line net income by 215%, a sub-20x P/E ratio is remarkably cheap.

Just look at this past quarter: they generated a strong non-GAAP EPS of $0.13 per share. Looking ahead, in the earnings call, management projected “total Q2 revenue to land between RMB 6.24 billion and RMB 6.34 billion”, which translates to a strong 25% to 27% YoY growth rate. According to the Seeking Alpha consensus, forward Non-GAAP EPS estimate for ATRenew is at $0.45 for 2026.

If we apply a fair market multiple of 20x to that $0.45 profit target (using Japan’s well-known circular economy marketplace, Mercari, as a proxy) that gives us a fair price target for ATRenew of $9 per share, more than double its current price. According to Google Finance, eBay's current Trailing Twelve Months (TTM) P/E multiple is approximately 25.3x. If we take eBay’s multiple and take 15% off for small-cap company risk premium, we get a risk-adjusted multiple of 21.5x. Multiplying that 21.5x multiple by our $0.45 profit target means the fair price target for ATRenew would be over $9.6 per shar

Of course, people could argue that Mercari and eBay are not good comparables to ATRenew, and I agree. Mercari operates in Japan and eBay in U.S., both with different consumer behavior, company size and regulatory risk. When valuing a U.S.-listed Chinese company, we can’t overlook the risk tied to U.S.-China relations. Although tensions have recently eased somewhat following Trump’s recent visit to China, the long-term outlook remains uncertain.

But honestly, given the size of that market and leading position of ATRenew, this target is super conservative. I wouldn’t be surprised at all if the company goes even higher. If you take their current forward P/E ratio of 11.6x and divide it by their expected earnings growth rate of 25.6%, ATRenew’s true PEG ratio is only 0.45. In value investing, any PEG ratio under 1 tells you a business is fundamentally mispriced against its actual growth speed. ATRenew is clearly undervalued because it's listed on NYSE and unknown to most U.S. investors.