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RENT stock price falls 8% as earnings fall short of estimates

By Monte Stewart


Rent the Runway clothing on hangers
Rent the Runway stock fell after the company reported a larger-than-expected loss - Photo: Shutterstock

Rent the Runway’s stock price dropped more than 8% in extended trading hours Wednesday after the women’s clothing-rental company reported a larger-than-expected loss.

New York-based RENT posted a loss of $6.72 per share on both a basic and diluted basis, the company said in its fiscal third-quarter earnings report.

Analysts polled by Dow Jones had expected Rent to post an adjusted loss of 96 cents per share.

Rent issued its earnings report after markets closed. The stock fell 10.23% on the Nasdaq Global Select Market during regular trading hours.

Clothes loaned on subscription basis

Rent loans women’s clothes on a monthly-subscription basis and sells items through its online platform. The company originally made its mark by renting dresses for weddings and special events.

The quarter was Rent’s first as a public company.

Rent said the loss stemmed from a revaluation of warrants, the extinguishment of debt, and other charges, which were all related to the company’s October upsized IPO. Meanwhile, the company reported a 66% year-over-year revenue increase to $59m from $35.5m in the third quarter of 2020.

Oil - Crude

71.34 Price
-0.080% 1D Chg, %
Long position overnight fee -0.0213%
Short position overnight fee -0.0006%
Overnight fee time 22:00 (UTC)
Spread 0.030


1,987.09 Price
-0.880% 1D Chg, %
Long position overnight fee -0.0199%
Short position overnight fee 0.0117%
Overnight fee time 22:00 (UTC)
Spread 0.50


16,149.90 Price
+0.400% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 1.8


41,887.25 Price
-4.330% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00

Business reaccelerating, says CEO

“We delivered significant growth across subscribers and revenue and improved our gross margins,” said co-founder and CEO Jennifer Hyman in a news release accompanying the earnings report.

“As a leader in clothing subscription and rental with a differentiated operating platform and deep competitive advantages, we believe these metrics are clear indicators of our ongoing business re-acceleration.”

Subscriber count up 78%

The active subscriber count rose 78% year-over-year and was at 87% of its pre-pandemic total. The gross profit margin – a closely watched metric – was 34%, well up from the 7% recorded a year earlier.

Rent was hit hard by the Covid-19 pandemic, which prompted the permanent closures of the company’s five brick-and-mortar stores – in New York, Chicago, Los Angeles, San Francisco and Washington, DC – in 2020.  

Rent forecast revenue of $6.8m to $63.3m for the fiscal fourth quarter and $202m to $202.5m for the year. The company expects active subscribers of 121,000 to 122,000 for both the fourth quarter and the year.

Read More: US market close: S&P closes high for third straight day

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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