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Rent The Runway, Inc. (RENT)
NASDAQ:RENT
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Rent the Runway
(NASDAQ:RENT)
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Rating:55Neutral
Price Target:
$7.50
▲(51.82% Upside)
Rent the Runway's overall stock score is primarily impacted by its financial instability, with high debt and negative cash flow being significant concerns. Despite strong technical momentum and positive earnings call developments, the stock's valuation remains unattractive due to ongoing losses. The company's ability to sustain recent operational improvements will be crucial for future performance.
Positive Factors
High gross profit margin
A strong gross profit margin indicates the core rental business captures healthy unit economics and can cover fulfillment and platform costs. This provides durable capacity to invest in customer experience, inventory selection and marketing while supporting margin recovery over several quarters.
Recurring subscriber growth and engagement
Sustained subscriber growth and higher app engagement signal improving product-market fit for the subscription model. Recurring revenue and rising parts per subscriber support lifetime value expansion and more predictable cash flow over the medium term, aiding scaling economics.
Material debt reduction and extended maturity
The recapitalization that cut debt and extended maturities materially lowers financial leverage and interest pressure, improving liquidity and strategic optionality. This structural change lengthens runway and reduces refinancing risk over the next several years.
Negative Factors
Balance sheet leverage and negative equity
Negative equity and heavy leverage constrain financial flexibility, limit access to unsecured financing, and raise solvency concerns. Over months this can hamper strategic investments, partnerships, or acquisitions and increase sensitivity to cash flow variability.
Declining free cash flow
Steep FCF decline signals the business is consuming cash to fund inventory and growth. Persistently negative free cash flow erodes reserves, forces external financings or equity dilution, and limits ability to deleverage or invest in long-term initiatives without structural improvement.
Negative EBIT and low operating profitability
A negative operating margin means core operations do not yet generate sustainable profits despite revenue gains. Continued operating losses require either durable margin expansion or scale to reach breakeven; absent that, profitability remains a medium-term risk for shareholder returns.
Rent the Runway (RENT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$235.74M
Dividend YieldN/A
Average Volume (3M)138.66K
Price to Earnings (P/E)―
Beta (1Y)1.81
Revenue Growth2.91%
EPS Growth94.12%
CountryUS
Employees912
SectorConsumer Cyclical
Sector Strength84
IndustryApparel - Retail
Share Statistics
EPS (TTM)13.81
Shares Outstanding33,390,903
10 Day Avg. Volume109,606
30 Day Avg. Volume138,659
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)-0.17
Price to Sales (P/S)0.10
P/FCF Ratio-0.75
Enterprise Value/Market Cap0.77
Enterprise Value/Revenue0.58
Enterprise Value/Gross Profit3.53
Enterprise Value/Ebitda1.04
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Rent the Runway Business Overview & Revenue Model
Company DescriptionRent the Runway, Inc. rents designer wear for women through its stores and online retail. The company offers ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, ski wear, home goods, evening wear, and kids wear, as well as accessories. It also engages in the software development and support activities. The company was incorporated in 2009 and is headquartered in Brooklyn, New York.
How the Company Makes MoneyRent the Runway generates revenue primarily through its subscription and rental services. The subscription model allows customers to pay a monthly fee for access to a rotating closet of designer fashion, which is a key revenue stream. Additionally, the company earns money through one-time rentals, where customers can rent items for specific occasions without committing to a subscription. Rent the Runway also benefits from partnerships with various fashion designers and brands, enhancing its inventory and attracting a diverse customer base. The company may also generate revenue through additional services such as clothing cleaning and insurance options, further diversifying its income streams.
Rent the Runway Key Performance Indicators (KPIs)
Any
Subscriber Breakdown
Provides a detailed look at the composition of subscribers, revealing trends in customer acquisition, retention, and the overall health of the subscription model.
Provides a detailed look at the composition of subscribers, revealing trends in customer acquisition, retention, and the overall health of the subscription model.
Data provided by:
The Fly
The FlyRent the Runway Earnings Call Summary
Earnings Call Date:Dec 12, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Apr 15, 2026
Earnings Call Sentiment Neutral
The earnings call reflects a generally positive outlook with strong subscriber and revenue growth, reduced debt, and enhancements in customer experience. However, challenges remain with decreased gross margins, higher operating expenses, and negative free cash flow.Q3-2025 Updates
Positive Updates
Debt Reduction and Recapitalization
The company successfully reduced its total debt from approximately $319 million to approximately $120 million and extended the maturity to 2029, following a strategic recapitalization with new capital from two private equity firms.
Subscriber Growth
Ending active subscribers grew by 12% year-over-year, reaching 148,916. Average active subscribers increased by 12.9% year-over-year, indicating strong subscriber growth.
Revenue Growth
The company reported a 15.4% increase in total revenue in Q3 2025, amounting to $87.6 million, with expectations of 11% to 14% year-over-year revenue growth in Q4.
Improved Customer Engagement
Net Promoter Score increased by 43% year-over-year, and customer engagement metrics such as visits and heart rates are up, with average active subscribers visiting the app 34% more year-over-year.
Enhanced Inventory and Customer Experience
Inventory-related cancellations decreased by nearly 30% year-over-year, and the company introduced several features to enhance customer experience, resulting in a 57% increase in engagement with the app's new homepage.
Negative Updates
Decreased Gross Margins
Gross margins decreased from 34.7% in Q3 2024 to 29.6% in Q3 2025, primarily due to higher revenue share costs from increased inventory levels.
Higher Operating Expenses
Operating expenses increased by 7% year-over-year, mainly due to higher employee expenses, although they decreased as a percentage of revenue.
Negative Free Cash Flow
Free cash flow was negative $13.6 million in Q3 2025, compared to negative $3.4 million in Q3 2024, due to lower adjusted EBITDA and higher inventory purchases.
Company Guidance
In the third quarter of fiscal year 2025, Rent the Runway, Inc. provided optimistic guidance, highlighting significant progress in financial and operational metrics. The company reduced its total debt from approximately $319 million to $120 million, extended its maturity to 2029, and is on track for 11% to 14% year-over-year revenue growth in Q4, compared to 1% in Q4 2024. Q3 saw a 12.4% increase in active subscribers year-over-year, with total revenue rising by 15.4% to $87.6 million. Despite a price increase in August, customer retention and acquisition improved, with inventory-related cancellations down nearly 30% year-over-year in Q3. The Net Promoter Score increased by 43% year-over-year, while the average subscriber visited the app 34% more times, and parts per subscriber rose by 15%. However, the adjusted EBITDA margin decreased to 4.9% of revenue due to higher revenue share expenses, and free cash flow was negative $13.6 million. For fiscal year 2025, the company expects revenue to range between $323.1 million and $325.1 million, with adjusted EBITDA margins between 4.9-5.5% of revenue.Rent the Runway Financial Statement Overview
Summary
Rent the Runway faces significant financial challenges, including high debt levels, negative equity, and declining free cash flow. Despite strong gross margins, profitability remains elusive with a negative EBIT margin and low net profit margin. The balance sheet instability and cash flow issues are major concerns.Income Statement
Rent the Runway shows a modest revenue growth rate of 3.86% TTM, indicating some positive momentum. However, profitability remains a challenge with a low net profit margin of 3.37% and negative EBIT margin of -14.88% TTM. The gross profit margin is strong at 72.31% TTM, suggesting efficient cost management. Despite improvements, the company struggles with consistent profitability.45
Neutral
Balance Sheet
The balance sheet reveals significant financial leverage with a negative debt-to-equity ratio of -1.21 TTM, indicating high debt levels relative to equity. The return on equity is negative, reflecting challenges in generating returns for shareholders. The equity ratio is not available due to negative equity, highlighting financial instability.30
Negative
Cash Flow
Cash flow analysis shows a concerning decline in free cash flow growth at -38.20% TTM. The operating cash flow to net income ratio is negative, indicating cash flow issues. However, the free cash flow to net income ratio is high at 6.55 TTM, suggesting some ability to convert net income into free cash flow despite overall cash flow challenges.40
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 314.50M | 306.20M | 298.20M | 296.40M | 203.30M | 157.50M |
| Gross Profit | 51.60M | 67.70M | 60.80M | 55.10M | 8.90M | -23.50M |
| EBITDA | 174.90M | 76.80M | 25.70M | -4.70M | -67.20M | -52.20M |
| Net Income | 10.60M | -69.90M | -113.20M | -138.70M | -211.80M | -171.10M |
Balance Sheet | ||||||
| Total Assets | 231.00M | 509.60M | 534.60M | 336.20M | 447.50M | 320.70M |
| Cash, Cash Equivalents and Short-Term Investments | 50.70M | 77.40M | 84.00M | 154.50M | 247.60M | 95.30M |
| Total Debt | 202.30M | 380.80M | 356.60M | 315.20M | 312.80M | 414.20M |
| Total Liabilities | 266.10M | 692.10M | 656.90M | 371.50M | 376.40M | 459.30M |
| Stockholders Equity | -35.10M | -182.50M | -122.30M | -35.30M | 71.10M | -138.60M |
Cash Flow | ||||||
| Free Cash Flow | -14.40M | -40.70M | -98.20M | -118.70M | -83.40M | -121.50M |
| Operating Cash Flow | -2.20M | 12.90M | -15.70M | -47.70M | -42.30M | -42.80M |
| Investing Cash Flow | -42.20M | -20.10M | -54.60M | -44.30M | -22.50M | -58.40M |
| Financing Cash Flow | 20.70M | -300.00K | 700.00K | -4.00M | 215.20M | 168.50M |
Rent the Runway Technical Analysis
Neutral
4.94
Price Trends
7.04
Positive
5.79
Positive
5.22
Positive
Market Momentum
-0.08
Positive
41.67
Neutral
15.39
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RENT, the sentiment is Neutral. The current price of 4.94 is below the 20-day moving average (MA) of 8.00, below the 50-day MA of 7.04, and below the 200-day MA of 5.22, indicating a neutral trend. The MACD of -0.08 indicates Positive momentum. The RSI at 41.67 is Neutral, neither overbought nor oversold. The STOCH value of 15.39 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RENT.
Rent the Runway Risk Analysis
Rent the Runway disclosed 62 risk factors in its most recent earnings report. Rent the Runway reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Rent the Runway Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $4.38B | 26.73 | 31.50% | ― | 2.97% | 9.85% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
55 Neutral | $235.74M | -5.83 | ― | ― | 2.91% | 94.12% | |
54 Neutral | $644.16M | -21.74 | -14.67% | ― | -0.08% | 73.05% | |
54 Neutral | $51.61M | -1.15 | -195.23% | ― | -12.10% | -44.14% | |
48 Neutral | $44.80M | -1.30 | -34.77% | ― | -8.31% | 36.10% | |
45 Neutral | $114.08M | -51.80 | ― | ― | -7.33% | -114.80% |
* Consumer Cyclical Sector Average
RENT
Rent the Runway
7.06
0.13
1.88%
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VSCO
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18.62
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46.04%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.