NEW YORK, Nov. 15, 2022 (GLOBE NEWSWIRE) -- Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) is investigating claims on behalf of investors of Rent the Runway, Inc. (“Rent the Runway” or “Company”) (NASDAQ: RENT). A class action complaint has been filed on behalf of purchasers of Rent the Runway Class A common stock in or traceable to the Company’s October 27, 2021 initial public offering (“IPO”).
If you acquired Rent the Runway securities and would like to discuss our investigation or your rights to recover losses, please click below:
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If you are a member of the proposed Class, you may move the court no later than January 13, 2023 to serve as a lead plaintiff for the purported class. You need not seek to become a lead plaintiff in order to share in any possible recovery.
According to the Complaint, Rent the Runway is an e-commerce platform that allows users to rent, subscribe, or buy designer apparel and accessories.
On October 4, 2021, the Company filed a registration statement with the SEC for its IPO which, after several amendments, was declared effective on October 26, 2021 (the “Registration Statement”). On October 27, 2021, the Company then filed a prospectus for the IPO with the SEC, which incorporated and formed part of the Registration Statement (the “Prospectus”). Pursuant to the Registration Statement and Prospectus for the IPO, on or about October 27, 2022, the Company issued 17 million shares of Class A common stock at $21 per share for $357 million in gross offering proceeds.
On December 8, 2021, after the market closed, the Company issued a press release announcing its financial results for its fiscal third quarter ended October 31, 2021 – the quarter during which the IPO was conducted. According to the complaint, the release stated that the Company had suffered a quarterly net loss of $87.8 million (nearly double its loss of $44.3 million the prior year quarter), that its fulfillment expenses increased 75% from the prior year quarter, and that its marketing expenses increased more than tenfold from the prior year quarter.
Following this news, Rent the Runway shares declined during the next three trading days from a close of $11.50 per share on December 8, 2021 to close at $9.68 per share on December 13, 2021.
According to the Complaint, by October 2022, the price of the Company’s Class A common stock had fallen below $2 per share, 90% below the $21 per share price Rent the Runway stock had been sold to the investing public less than one year prior.
According to the complaint, statements in the Registration statement were materially false and misleading when made because they failed to disclose adverse facts that existed at the time of the IPO including: (1) the Company was continuing to face extraordinary business headwinds, such as transportation headwinds and labor wage rate increases, from the COVID-19 pandemic; (2) the Company’s active subscriber enrollments had sharply decelerated from the growth trajectory represented in the Registration Statement; (3) the Company needed to substantially increase marketing and advertising costs from historical figures in order to attempt to grow its active subscriber network; (4) the Company was suffering from ballooning fulfillment and transportation costs; and (5) as a result of the above, the Company 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.
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If you have any questions about this Notice, your rights, or your interests, please contact:
Pamela Mayer
KAPLAN FOX & KILSHEIMER LLP
850 Third Avenue, 14th Floor
New York, New York 10022
(646) 315-9003
E-mail: pmayer@kaplanfox.com
Laurence D. King
KAPLAN FOX & KILSHEIMER LLP
1999 Harrison Street, Suite 1560
Oakland, California 94612
(415) 772-4704
Fax: (415) 772-4707
E-mail: lking@kaplanfox.com
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