Rent the Runway, Inc. (NASDAQ: RENT) Securities Fraud Class Action

Rent the Runway investors may receive additional information about the case by clicking the link "Submit Your Information" above.  If you are a member of the class described below, you may no later than January 13, 2023 move the Court to serve as lead plaintiff of the class, if you so choose.

A class action lawsuit has been filed on behalf of those who purchased or acquired Rent the Runway, Inc. (“Rent the Runway”) (NASDAQ: RENT) common stock pursuant and/or traceable to the registration statement and related prospectus (collectively, the “Registration Statement”) issued in connection with Rent the Runway’s October 2021 initial public offering (the “IPO”).

Case Background:
On October 27, 2021, Rent the Runway conducted its IPO, selling 17 million shares at $21.00 per share. In the months leading up to the IPO, the company claimed that it was experiencing a business resurgence as concerns about the COVID-19 pandemic lessened, lockdown orders ceased, and its customers engaged in more social outings.

Then on December 8, 2021, Rent the Runway disclosed in a press release that the company had suffered a quarterly net loss of $87.8 million in the quarter that ended on October 31, 2021 (just days after the IPO), nearly double its loss of $44.3 million the prior year quarter. The release also stated that the company’s fulfillment expenses rose significantly to $19.2 million from $11 million the prior year quarter, a 75% increase, and that its marketing expenses increased more than tenfold from $1.4 million in the prior year quarter to $10.8 million. Additionally, the company reported only 116,833 active subscribers at quarter’s end and that it expected just 121,000 to 122,000 active subscribers for the following quarter, representing a sharp deceleration in active subscriber growth.

On an earnings call held with investors that same day, Rent the Runway’s CFO acknowledged that the company was suffering “transportation headwinds” and “labor wage rate increases” during the quarter. Although the Registration Statement failed to disclose these headwinds, the CFO stated not only that they predated the IPO but also that they were “anticipated.” Following this news, the price of Rent the Runway shares declined by $1.31 per share, or approximately 10.23%, from $12.81 per share to close at $11.50 on December 8, 2021.

By November 14, 2022, the day the lawsuit was filed, the price of Rent the Runway Class A common stock had fallen to $1.58 per share, 92.48% below the price at which its common stock had been sold to the investing public in the IPO.

The complaint alleges that the Registration Statement failed to disclose that: (1) Rent the Runway was continuing to face extraordinary business headwinds, such as transportation headwinds and labor wage rate increases, from the COVID-19 pandemic; (2) Rent the Runway's active subscriber enrollments had sharply decelerated from the growth trajectory represented in the offering documents and, as a result, Rent the Runway was several months away from approaching its pre-pandemic levels of active subscriptions; (3) Rent the Runway needed to substantially increase marketing and advertising costs from historical figures in order to attempt to grow its active subscriber network; (4) Rent the Runway was suffering from ballooning fulfillment and transportation costs; and (5) as a result, Rent the Runway was suffering accelerating operational losses at the time of the IPO and was far less likely to achieve profitability in the near term, if ever, than represented.

A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case.  Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP:  Jonathan Naji, Esq. (484) 270-1453 or via e-mail at info@ktmc.com.  If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.