Rent the Runway, Inc. (RENT) Issued a False and Misleading Registration Statement in Connection with its October 2021 Initial Public Offering
A shareholder filed a class action on behalf of all persons and entities that purchased Rent the Runway, Inc. (NASDAQ: RENT) Class A common stock in or traceable to the Company’s October 2021 initial public offering (“IPO”) for remedies pursuant to the Securities Act of 1933. Rent the Runway is an e-commerce platform that allows users to rent, subscribe, or buy designer apparel and accessories from over 750 luxury brand partners.
According to the complaint, Rent the Runway held its IPO in October 2021, selling 17 million shares at $21 per share. The Registration Statement touted the Company’s rapid growth, low marketing and fulfillment costs, and operating efficiencies.
However, at the time of the IPO, defendants failed to disclose to investors that the Company was facing extraordinary headwinds relating to transportation and labor wage rate increases from the COVID-19 pandemic and that its active subscriber enrollments had decelerated from the growth projector represented in the Registration Statement. Moreover, Rent the Runway would need to substantially increase its marketing and advertising costs to grow its active subscriber network and was incurring increased costs related to fulfillment and transportation. Accordingly, defendants failed to disclose accelerating operational losses at the time of the IPO, which would make the Company less likely to achieve profitability in the near term, if ever, in contrast to what it represented.
By October 2022, the price of RTR Class A common stock had fallen below $2 per share, 90% below the price at which RTR common stock had been sold to the investing public less than one year prior.
What Now: Shareholders who purchased shares of Rent the Runway, Inc. Class A common stock pursuant to the Company’s October 2021 IPO, must file their papers to be appointed lead plaintiff for the class by January 13, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
