Loungewear may have taken the spotlight during the pandemic (which is why Crocs stock is up 243 percent over the last year), but dressing to the nines is coming back as social gatherings return. With that in mind, an impending IPO for the designer apparel rental site Rent the Runway makes total sense.
Here’s what to know about Rent the Runway as this company makes its way down the catwalk toward an eventual public offering.
TL;DR
- Rent the Runway founders Jenn Hyman and Jenny Fleiss filed a confidential registration statement with the SEC, citing their intention to go public.
- Hyman and Fleiss originally met at Harvard Business School. Together, they have grown the company to an $800 million+ valuation.
- Currently, Rent the Runway generates about $100 million in revenue annually.
- In 2019, the company ceased operations during a “customer service meltdown.” Rent the Runway has since bounced back.
- The Rent the Runway IPO date remains under wraps, as does the ticker symbol, share price, and number of shares.
Related: Why new IPOs aren’t available at market open
Rent the Runway’s women-led company history
Two women with the same first name, Jennifer Hyman and Jennifer Fleiss, founded Rent the Runway in November 2009.
In true founders fashion, Hyman and Fleiss met while attending Harvard Business School.
New York Congresswoman Alexandria Ocasio-Cortez famously repped Rent the Runway on the campaign trail in 2019. Her subscription allowed her to sport different business looks without having to purchase a single item. While some constituents outed AOC for wearing luxury clothing while supporting income equity and environmental issues, she retorted by letting everyone know her outfits were Rent the Runway rentals.
As fast fashion gets the boot in many circles, Rent the Runway serves as a major industry disruptor. The subscription model (with memberships starting at $69/month) combined with a vast 750+ designer partner pool helps the company generate major revenue. Plus, the platform offers subscriptions for high-end apparel, everyday wear, and even weddings. The addition of e-commerce buying only adds to this.
Rent the Runway fundraising rounds to know about
The company’s Crunchbase profile divulges the details of all the Rent the Runway fundraising rounds to date. Here are the seven most recent:
- Series C: In 2013, Rent the Runway secured $44.4 million from seven investors including American Express Ventures and Novel TMT Ventures.
- Series D: Another seven-investor round occurred the following year, led by TCV and amounting to $60 million.
- Series E: Fidelity Management and Research Company led this $60 million round in 2016.
- Venture Round: In 2018, Blue Pool Capital invested $20 million.
- Debt Financing: In 2018, Temasek Holdings financed $200 million in debt for Rent the Runway.
- Series F: Bain Capital Ventures and Franklin Templeton Investments contributed an aggregate $125 million in 2019.
- Venture Round: SuRo Capital earned a $5 million stake in 2020.
Rent the Runway also acquired a smaller brand in the industry called Go Try It On to weed out competition and strengthen its core offering. Various secondary market fundraising rounds have helped them earn capital as well.
Ultimately, Rent the Runway has climbed its way to the top and now boasts a corporate valuation of at least $800 million. That’s lower than its previous unicorn status of $1 billion, with funds likely lost amid pandemic-related struggles.
Path to the Rent the Runway IPO
Rent the Runway founders Hyman and Fleiss landed in the spotlight in early June as rumors about a potential IPO started swirling. These rumors were the result of Rent the Runway executives interviewing bankers to potentially underwrite a deal.
At the time, Goop owner Gwenyth Paltrow joined the board of directors. Hyman touted Paltrow’s value to the brand, stating, “Gwyneth’s keen understanding of consumer psychology and unparalleled ability to tap into and define the cultural zeitgeist will play a key role in propelling Rent the Runway forward in a post-pandemic world.”
By mid-July, the company solidified those IPO rumors by filing a confidential registration statement with the SEC. Once a company goes public, all its fiscal health lunges into the spotlight. Because of that, some executives prefer to keep things private until they have all their ducks in a row. Airbnb and Applovin are two recent examples of IPOs that were confidential until shortly before their public debut, so Rent the Runway is not alone.
When is the Rent the Runway IPO date?
While the Rent the Runway IPO paperwork remains confidential, investors are adding an unknown ticker to their watchlist. The company will have to share some key IPO details moving forward, like:
- The stock’s ticker symbol
- Number of shares for sale
- Price range or firm price for IPO shares
- Estimated or official IPO date
Investors can tick those details off as they come, but in the meantime, Rent the Runway is keeping things under wraps.
What to know about Rent the Runway stock before it comes
For investors with a tame risk tolerance, knowing the risks associated with future Rent the Runway stock is key.
One urgent concern has to do with health and safety during the pandemic.
In 2020, the company suffered as sharing culture shuttered. Now, people are much more educated about the novel virus and don’t feel quite so scared to swap (clean) clothing.
Still, the COVID-19 Delta variant is a real concern in the US and abroad. Rent the Runway will have to reckon with the pandemic alongside all the other businesses whose models juxtapose social distancing.
Perhaps more crucial to the average investor is the sheer volume of Rent the Runway competitors. While the platform has a unique business model, there’s no denying that publicly traded brands like Etsy and Levi Strauss put up a good fight. Warby Parker and Authentic Brands Group are planning to go public, too. And who knows what the future holds for private companies ThredUp and StitchFix.
Remember that $200 million debt refinancing round?
Rent the Runway actually ceased operations in 2019 after what a reporter described as a “customer service meltdown” that led to canceled orders all over the place. The pause in operations didn’t last and Rent the Runway returned in full force.
One on hand: If Rent the Runway can bounce back from rock bottom, they can do anything.
On the other hand: That’s a big blemish on the company’s background.
With all that said, there’s a lot of potential opportunity in a Rent the Runway investment. After all, $100 million in annual revenue is nothing to skim over. The stock could be a punchy player in the small- to mid-cap range, depending on how the IPO plays out.
Bottom line
Trends don’t last forever, but public companies usually want to. With Rent the Runway founders Jenn Hyman and Jenny Fleiss making moves toward the public market, the IPO could go either way.
As an investor, it’s important to base your decision to buy on the facts. With the registration statement still confidential, key factors like share price, number of shares offered, and details about how the company plans to use the capital remain unknown. Plus, market conditions at the time could sway your investment in a whole new direction, so remain flexible and do what’s best for your portfolio—whether or not that includes Rent the Runway stock.
Related: What to know about the Buzzfeed IPO