Rent the Runway stock jumps on optimistic 2024 outlook

Rent the Runway (RENT) shares are soaring during Thursday's trading session after the company shared an upbeat outlook for the year ahead. Rent the Runway stated that 2023 was a year of "significant improvements," expecting 2024 to be a "milestone" year for the company's financials.

The clothing rental retailer plans to break even and free cash flow in 2024. This comes after the company reported a weaker-than-expected loss per share of $7.06 in its most recent fourth quarter earnings, compared to the street's expectation of a $6.05 loss.

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This post was written by Angel Smith

Video transcript

SEANA SMITH: Shares of Rent the Runway skyrocketing after calling 2023 a year of significant improvements, and they're also expecting a milestone fiscal year 2024. The clothing rental company saying that it expects to break even in free cash flow this year. Now, this is a huge reversal given the narrative that we have seen surrounding Rent the Runway and the typical reactions that we have been getting following their most recent earnings results here. So again, this surprised the street to the upside here. They're seeing lots of reason to be encouraged by this print. And as a result of that, you're seeing a massive move to the upside here in shares up nearly 40% ahead of the open.

I am a loyal customer. I think it makes the most sense, but they have really been struggling to expand their customer base and also just charge slightly higher for each of their-- which I'm not necessarily advocating on a personal basis, but I do think they have a little bit of room here just in terms of pricing dynamics and potentially exploring that down the road.

BRAD SMITH: They've got more modules that it seems like they've rolled out over the last year. That's really unlocked some good growth for them, especially for the amount of customers that might rent something and decide, hey, why not purchase this at a lower price level than what it would retail? So that is something certainly that they've been able to add it on. And ultimately, setting the foundation, as Jennifer Hyman said on this particular release, setting the foundation for a milestone, fiscal year 2024. And particularly here, as I was mentioning the premium personal concierge service to style their customers. And then additionally here, more NPS, NPS today, highest level in several years.

NPS net promoter score, it's the amount of people that would essentially recommend your business or kind of beyond word of mouth recommend your business to another potential customer out there as well. Spirit Airlines, very low NPS. Rent the Runway, highest level that they've ever seen of NPS. So that particularly is one way that you can look at that as well here. I just can't wait for men's.

SEANA SMITH: It makes a lot of sense. I think that you're on to something there.