Overall, the RENT stock commands a Moderate Buy consensus rating based on four Buys and two Holds. The Wall Street community is cautiously optimistic about the stock. Is Rent the Runway Stock a Buy, According to Analysts? She added, “Over the medium-term, we continue to believe we can generate 15% profitability on Adjusted EBITDA after product depreciation.”įurther, in terms of valuation, the RENT stock looks cheap, trading at a low EV/sales ratio of about 1.0x. The company has reported EBITDA profitability for two consecutive quarters, with a Q3 EBITDA margin of 8.5%.ĬFO Scarlett O’Sullivan believes that the company’s “gross margin and fixed cost leverage improvements help to ensure RTR can navigate potentially rougher macro conditions, while improving our profitability and accelerating our path to free cash flow breakeven.” However, the most recent results indicate that RENT may be inching closer to profitability. Importantly, the company is yet to turn profitable. This should improve the company’s cash position. It’s also on track to achieve annual cost savings of $25 million – $27 million in Fiscal 2023. It was encouraging to see the results from this in its Q3 results.ĭuring the Q3 earnings conference, the company reassured investors that it is working on numerous initiatives to further enhance its subscriber base, luring its customers with newly-added celebrity collections and exclusive designer brands. Restructuring Initiatives Effectively Leading to a TurnaroundĮarlier in September, the company announced a restructuring plan, including slashing 24% of its workforce. Moreover, its adjusted EBITDA margin is forecast to range between 4% and 5%. For the full year, total revenue is expected to range between $293 million – $295 million, higher than the prior guided range of $285 million – $290 million.įor Q4, total revenue is expected to range between $72 million – $74 million, while the consensus is pegged at $72 million. On top of robust Q3 results, management raised its guidance for 2022. What was even more enticing was the 28% growth registered in average revenue per user (ARPU). Total subscribers also increased by 17% to 176,167. Investors cheered the surprising 15% growth witnessed in active subscribers to 134,240. Positively, its loss per share also came down remarkably to $0.56 from $6.72 in the year-ago period. Q3 revenue of $77.4 million grew 31% year-over-year, easily beating $72.9 million consensus expectations. Shares of the subscription-based fashion service platform surged after it reported impressive revenues for the third quarter and also raised its full-year guidance. Rent the Runway is a premier e-commerce platform that allows users to rent, subscribe, or buy stylish designer apparel and accessories.Īs the world fears entering into recession, more and more people choose to rent expensive designer labels instead of paying high prices to own them. I will buy the stock, given its cheap valuation and strong growth outlook. Looking at the results from the company’s turnaround efforts, the goal of profitability may be around the corner. However, it has pulled back 28% in the past few trading sessions. Its stock is up over 120% in the past month, thanks to upbeat Q3 results and a raised outlook. Despite the grim scenario, one stock that has been a winner is Rent the Runway ( NASDAQ: RENT). All Rights Reserved.It’s well known that consumer spending has taken a huge hit in recent months. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2019 and/or its affiliates. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. Factset: FactSet Research Systems Inc.2019. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes.
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