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Monday, August 15, 2022

Rent the Runway, Inc. (RENT) Stock is in Good Shape for Investment

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Rent the Runway, Inc. (RENT) is breaking the trillion-dollar fashion industry norms and altering the dress-up ways of the women through the Closet in the Cloud, the pioneer global and largest shared designer closet.  The online direct retail market size in the US will surge by 460 billion from the forecasted 2021 to 2026 period with an accelerating CAGR of 11.64%. The company is placed in the top 36% i.e., 93/253 companies.

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RENT: Recent Developments

On April 19, RENT’s Executive management presented at the Virtual Shareholder Equity Conference. On March 17, the company reported its Impact Strategy, defining its long-term goals with specified and measured short-term aims to confront the tenacious issues that the company is equipped to address. Among its most distinctive pledges is its aim to displace the production need for 0.5 million garments by FY26, continuing its pledge to address overproduction and waste-related issues in fashion.

RENT: Earnings

RENT recorded net revenue of $203 million which is 29% up to as compared to the past year or fiscal 2021. Its diluted EPS data showed that the company’s performance (-$8.51) was not well and observed a phenomenal decline of 212%. The company is expecting revenue in the range of $301-$305 million for fiscal 2023, while the EPS will remain between -$2.95 and -$2.66.

Comparison with Peers

When a comparison is made between RENT and its peers, it becomes clear that IMBI, HOUR, and YJ performed exceptionally well in terms of the gain in their stock price percentage change. While RERE, LITB, and CANG’s performances were poor.

Insider Transactions and Analyst Ratings

The total number of shares of RENT owned by institutions is 77%, while 7% of shares are possessed by the insiders. The total number of outstanding shares in this regard is 60.8 million. Credit Suisse’s analyst Michael Binetti maintained the company’s rating to outperform lowering its target price range from $20 to $11.

Risk Factors

RENT is currently unprofitable and has no chance to become profitable in the next three years. Also, another threat looming over the company’s shares is its highly volatile nature over the last three months.

Bottom Line

As the company is trading at 39% below the estimated fair value and revenue surge predictions are also green, along with its earnings, it is hopefully one of the next choices of the investors.

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