Rent the Runway falls in trading

Rent the Runway fell in trading after their revenue projections fell short of estimates in their first quarterly earnings since launching their IPO. Investors are proving to be skeptical of the clothing rental company.

Rent the Runway saw revenues of 63.3 million dollars in their fourth quarter, below the estimate of 66.2 million dollars that was compiled by Bloomberg analysts. However, the company exceeded projections in the third quarter.

Investors are questioning Rent the Runway’s profitability after the company reported a net loss of 88 million dollars in the quarter ending October 31. Almost 50 percent of the loss was attributed to non-recurring items.

Rent the Runway did take a major hit from the pandemic, as customers had little to nowhere to really wear clothes and were wary of wearing anything that was borrowed. For the third fiscal quarter, Rent the Runway reported 116,833 active subscribers, which is 87 percent of what they had two years ago pre-pandemic. However, that is 78 percent higher compared to last year, proving that customers are returning to the service and they are gaining new customers.

Active and paused subscribers totaled 150,075, surpassing pre-Covid figures. The stock isn’t doing particularly strong since its launch. It has declined 45 percent since the October 26 IPO launch.