Apparel renting service Rent the Runway saw a significant surge in its share price after it reported an optimistic outlook for the upcoming year, bolstered by a narrower loss from the previous year.
The stock (ticker: RENT) was up more than 135% as of midday on Thursday and more than 200% this week.
In an earnings report, Rent the Runway’s chief financial officer, Sid Thacker, expressed confidence in the company’s future. “We believe fiscal year 2024 will be transformative for Rent the Runway,” he said. “Over the past several years, we have significantly reduced fixed costs and made considerable progress towards building a more capital-light model. We expect these actions to result in free cash flow breakeven for fiscal year 2024.”
Revenue projections for the current year are optimistic, with expectations of a 1% to 6% increase from 2023 revenue of $298.2 million, compared to the estimated $312.5 million.
Rent the Runway, known for its online rental services for designer apparel, reported revenue of $75.8 million in Q4, representing a 0.5% year-over-year increase. This figure surpassed analysts’ expectations, which had forecasted $74.5 million.
Despite making progress in reducing losses, Rent the Runway reported a net loss of $24.8 million in Q4, down from $26.2 million in the same quarter of the prior year. However, its loss per share widened beyond the Street’s projected figure of $5.34, coming in at $7.02.
Shares have declined steadily since the company went public in 2021. Earlier this month, it announced a 1-for-20 reverse stock split to ensure compliance with Nasdaq listing standards. The split took effect on April 3.