RENT - Rent the Runway: There's Salvage Value Here

2024-05-24 23:48:03 ET

Summary

• Rent the Runway's stock has tripled year to date in sympathy with other small-cap meme stocks, but the company has also made significant fundamental improvements.
• The company offers a subscription membership for renting designer items, starting at $89/month.
• While subscribers have been declining, Rent the Runway is focusing on improving profitability and pushing inventory sales.
• The company expects to improve adjusted EBITDA margins to 16% in FY24, alongside hitting FCF breakeven.
• The stock trades at just 7x FY24 adjusted EBITDA.

Well, it's pretty safe to say that the small-cap IPO hype is over. A tremendous number of companies cashed in on investors euphoria amid the pandemic, but now, with interest rates persistently high and a tough macro climate on the horizon, investors have shifted back into safety mode....

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