Rent the Runway joined the growing slate of digital-native retail startups to go public on Oct. 27, listing on the NASDAQ under the ticker symbol “RENT.” But despite a strong start on its first day of trading, shares in the fashion rental service ended the day down 8%.
Shares began trading at $23 — $2 more than the company’s initial public offering price of $21 —skyrocketing Rent the Runway to an initial valuation of more than $1.7 billion. But by the end of the day shares were trading at $19.29, 9% lower than its targeted IPO price although still within the $18 to $21 range under which it initially marketed the stock.
Rent the Runway announced its plans to move forward with an IPO despite a recent downturn in business, citing surging ecommerce uptake and consumers’ increased awareness of sustainability as indicators of its future potential. As The Information put it: “No Profit, No Growth: Rent the Runway Valuation Hinges on Hope.”
In the company’s SEC filing, CEO and Co-founder Jennifer Hyman acknowledged the negative impact the pandemic had on the business but compared her company to the likes of Spotify and Netflix, saying that Rent the Runway is “pioneering the access model for fashion.”
The Rent the Runway IPO is the latest in a flurry of retail IPO filings in recent months that have included Mattress Firm, Guitar Center, Petco, Claire’s, Honest Company and Warby Parker. Next up is likely to be Allbirds, which filed for its IPO earlier this week.