Rent the Runway stock roars to over 60% gain after earnings
Rent the Runway (NASDAQ:RENT) stock surged by a record margin after rising above earnings expectations and raising guidance.
Shares of the Brooklyn-based fashion platform ripped 61.02% higher in afternoon trading on Thursday, accelerating sharply from a double-digit gain marked in the immediate aftermath of its earnings release.
For the quarter reported, a beat on top and bottom lines and adjusted EBITDA more than quadrupled expectations. The strong financial figures were abetted by a hefty 15% jump in active subscribers from the prior year period as consumers seek out bargains.
“We are encouraged by recent performance trends as this Cyber Monday marked our second highest subscriber acquisition day in company history,” CEO Jennifer Hyman told analysts on Wednesday, noting continued strong trends.
On the back of those strong results, management hiked full-year forecasts and suggested the possibility of positive EBITDA margin for 2022, a prospect it previously did not foresee.
“We continue to believe that our 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,” CFO Scarlett O’Sullivan commented.
It is worth noting that the stock has attracted elevated short interest. As of its earnings day, short interest stood at 16.28% of its float.
Read more on why SeekingAlpha contributor Michael Wiggins De Oliveira says the market got it wrong on Rent the Runway.