Rent the Runway, Inc.
The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Eastern District of New York on behalf of those who acquired Rent the Runway, Inc. (“Rent the Runway” or the “Company”) (NASDAQ: RENT) securities pursuant and/or traceable to the Registration Statement and Prospectus (collectively, the “Registration Statement”) issued in connection with Rent the Runway’s October 27, 2021 initial public offering (“IPO”); and/or (b) that purchased or otherwise acquired Rent the Runway securities between October 24, 2021 through November 14, 2022 (the “Class Period”). Investors have until January 13, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Rent the Runway is an online e-commerce website that allows women to rent designer apparel and accessories
On October 27, 2021, Rent the Runway conducted its initial public offering (“IPO”), selling 17 million shares at $21.00 per share.
In the months leading up to the IPO, Rent the Runway 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.
The lawsuit alleges that the Registration Statement was false and/or misleading and/or failed to disclose that: (i) Rent the Runway was continuing to face extraordinary business headwinds, such as transportation headwinds and labor wage rate increases, from the COVID-19 pandemic; (ii) 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; (iii) Rent the Runway needed to substantially increase marketing and advertising costs from historical figures in order to attempt to grow its active subscriber network; (iv) Rent the Runway was suffering from ballooning fulfillment and transportation costs; and (v) 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.
By October 2022, the price of Rent the Runway Class A common stock had fallen below $2 per share, 90% below the price at which Rent the Runway common stock had been sold to the investing public less than one year prior.