Rent the Runway stock suffers record drop, but analysts find reasons to stay bullish

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Shares of Rent the Runway were facing a record drop on Tuesday, but Wall Street analysts still managed to find positives in the fashion rental company’s disappointing earnings report and outlook, and plans to cut nearly one-quarter of the workforce. Planned.

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The company reported a narrower-than-expected loss and revenue that rose above forecast late Monday, but active customers that missed, a revenue outlook that was below forecast, and a cost-cutting plan that included its employees. 24% of the number of

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don’t miss: Fare Runway executives thought people were ready to reunite, but it looks like they were wrong.

stock hire,
-38.74%
It fell 36.0% in afternoon trading, putting it on track to surpass the previous record of a one-day drop of 16.9% on May 12, 2022.

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The stock, which went public on October 27, 2021, is now trading approximately 85% below its initial public issue price of $21. The company was valued at around $1.28 billion at the IPO price, compared to a current market capitalization of $202.1 million.

At least eight of the 11 analysts surveyed by FactSet cut their price targets in the wake of disappointing results and the announcement of job cuts, but nine analysts remained bullish on the stock and the other two were neutral. There are no bears.

The average analyst price target is now $7.80, down from $10.60 at the end of August and $77.78 at the end of November 2021. But the new average is still around 147% higher than the current prices.

factset

Wells Fargo analyst Ike Borucho lowered his stock price target from $12 to $8, but he reiterated his overweight rating as he found positive in the report to maintain his price target well over twice the current price.

Borucho said subscriber numbers were “poor,” but noted that there was some improvement later in the quarter. And as for the restructuring that leads to the loss of about one-quarter of its workforce, Borucho called it a “positive” because it improves the long-term profitability outlook.

Regarding the downbeat revenue outlook, Borucho said management was “cautious” given the “dynamic” customer background.

Raymond James analyst Rick Patel cut his price target from $9 to $8, saying he was “disappointed” by the customer data, and that although the trend is improving in the current quarter, visibility is low.

He reiterated his outperform rating, however, as the stock’s decline this year suggests that “a lot of bad news and uncertainty” may already be costing the price.

And Ashley Helgans of Jefferies cut its price target by 23% from $13 to $10, as the company is “still trying to diagnose” the reason for the sudden drop in customers in June. But it also reiterated its buy rating, saying that the stock’s reaction to the results was likely to be “overdone,” noting that excluding a number of costs, such as interest, taxes, depreciation and amortization (Ebitda), preceded profitability estimates. was achieved.

The stock is down 61.3% so far, while the S&P 500 index SPX,
-4.32%
declined by 16.7%.

Credit: www.marketwatch.com /

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