Rent the Runway’s (NASDAQ:RENT) IPO failed to live up to expectations. After debuting poorly, shares of this women’s clothing and accessories rental company have lost over 77% in value since listing on the exchange in October 2021.
Challenges stemming from the COVID-19 pandemic and widening losses due to increased shipment and marketing costs remained a drag.
While shares lost a significant amount of value, Wall Street maintains a bullish outlook on Rent the Runway stock.
So is Rent the Runway one of the top penny stocks to buy now?
Analysts Weigh In
Despite the pressure on margins and headwinds from the COVID-19 pandemic, Wall Street analysts continue to show confidence in Rent the Runway stock. On TipRanks, Rent the Runway sports a Strong Buy consensus rating based on 9 unanimous Buy recommendations.
Citing Rent the Runway’s recent quarterly performance, Erinn Murphy of Piper Sandler maintained a Buy rating and increased the price target to $23 from $22.
It’s worth noting that Rent the Runway’s revenues and active subscriber base showed a sharp recovery in Q3. Rent the Runway delivered revenues of $59 million in Q3, up 66% year-over-year. Moreover, it increased 26% on a quarter-over-quarter basis.
Its active subscribers reached 116,833 in Q3, implying a year-over-year increase of 78%. However, it still remained below pre-COVID levels.
Commenting on Rent the Runway’s Q3 performance, Morgan Stanley analyst Lauren Schenk stated that the company’s revenue growth rate is accelerating. Schenk added that its Q4 subscriber guidance was also ahead of her projection.
The analyst remains upbeat about Rent the Runway’s offerings and future path to profitability. Schenk has a buy rating on Rent the Runway stock.
Investors Buying the Dip
While Wall Street analysts have a positive outlook on RENT stock, investors holding portfolios on TipRanks are buying this dip. TipRanks’ Stock Investors tool shows that about 30.9% of these investors have increased their stake in RENT stock in the last 30 days.
Further, RENT’s stock forecast on TipRanks shows significant upside potential. The average Rent the Runway price target of $22.44 implies 374.4% upside potential to current levels.
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