Rent the Runway is getting some more runway.
The rental company upsized its IPO and priced its shares at $21 each — the high end of the $18 to $21 range the company projected for the offering.
And the big investors who bought into the offering (and will turn around and sell stock on the open market today) not only paid up, they bought more.
The company sold 17 million Class A shares in the offering, 2 million more than initially envisioned. Underwriters have a 30-day option to purchase up to 2.6 million additional shares.
Rent the Runway’s larger-than-expected offering counts as a vote of confidence from the investment set and bodes well for when the stock begins trading on the Nasdaq today under the “RENT” ticker symbol.
How the stock performs as more people buy-in will speak volumes about just how long Wall Street will be willing to support the rental concept.
The 12-year-old company, which has been pivotal in recreating the fashion rental space, logged cumulative losses of $674 million since its inception. For the first half, losses tallied $84.7 million on revenues of $80.2 million.
Clearly, blazing new trails isn’t cheap.
Still, the company has real scale to continue to test its model, featuring more than 18,000 styles from more than 750 designer brands.
About 80 percent of Rent the Runway’s revenues come from subscribers.
The question in the years ahead — for the company and investors — is whether the service can bring in enough subscribers to click over to profitability.
With the IPO, the company will have a new chunk of change to chase its future. Rent the Runway plans to use its proceeds to pay down debt and fund future growth.
Jennifer Hyman, the cofounder who leads the company as chief executive officer and chair, will now be doing that with Wall Street looking over her shoulder.
Clearly, she’s up for the challenge.
“I am obsessed with female self-confidence,” Hyman said in her letter to future shareholders, filed with the IPO paperwork. “That’s why I founded and have spent the last 13 years building this business. I believe that when women have confidence in themselves, they can change the outcomes of their lives, and they can change the world.”
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