IPO Story Rent the Runaway (RENT) Investors are fighting back 90% losses

E.D. New York

Court

On September 12, 2022, Rent the Runaway (RENT) issued a press release stating that the Company had achieved only 124,131 active subscribers at quarter end and the Company had launched a restructuring plan to reduce costs that included a 24% workforce reduction 

Going back in October 2021, RTR raised $357 million from investors in the IPO.
On June 9, 2022, RTR issued a press release for its fiscal quarter that ended on April 30, 2022. The release stated that the Company’s fulfillment and marketing expenses remained elevated compared to historical trends. 
On April 13, 2022, RTR issued a press release for its fourth fiscal quarter and year ending January 31, 2022. The release stated that the Company’s active subscribers had declined sequentially during the quarter to just 115,240 active subscribers at the quarter’s end. The release also stated that the Company’s fulfillment and marketing expenses remained elevated compared to historical trends. 
On December 8, 2021, RTR issued a press release announcing the Company’s financial results for its third fiscal quarter ended October 31, 2021 – i.e., the quarter during which the IPO was conducted. The release stated that RTR had suffered a quarterly net loss of $87.8 million, nearly double its loss of $44.3 million in the prior year's quarter. The release also stated that RTR’s fulfillment expenses rose significantly to $19.2 million from $11 million the prior year's quarter, a 75% increase and that its marketing expenses increased more than tenfold from $1.4 million in the prior year's quarter to $10.8 million. Additionally, the Company reported only 116,833 active subscribers at the quarter’s end and that it expected just 121,000 to 122,000 active subscribers for the following quarter, representing a sharp deceleration in active subscriber growth and indicating that the Company was several months away from achieving pre-pandemic active subscribers. 
Also on December 8, 2021, RTR hosted an earnings call with analysts and investors to discuss the results. During the call, O’Sullivan acknowledged that the Company was suffering “transportation headwinds” and “labor wage rate increases” during the quarter. Although the Registration Statement failed to disclose these headwinds,  O’Sullivan stated not only that they predated the IPO but also that they were “anticipated.” O’Sullivan further stated that substantially increased marketing spending was part of RTR’s “plan” and that the Company would “keep marketing spending at approximately 10% of revenue annually.”

By October 2022, the RENT price had fallen 90% below the price at which it had been sold to the investing public.

Taking all statements and representations into account, Investors have ground to suspect that the Company, its Leaders, and Involved Parties were misleading their shareholders on and after IPO.

Case Status

Attorney Investigation

Alleged Offence

Misleading Statements,

Financial Misrepresentation,

Failure to Disclose,

Negligence,

Omissions

Suspected Party

Directors,

Management,

Shareholder,

Investment Bank,

Service Provider

Security Type

Stocks

Trade Direction

Long

Shock Event Date

14 November 2022

IPO Story Rent the Runaway (RENT) Investors are fighting back 90% losses

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