BENSALEM, Pa.--(BUSINESS WIRE)--Law Offices of Howard G. Smith announces that a class action lawsuit has been filed on behalf of investors who purchased Rent the Runway, Inc. (“RTR” or the “Company”) (NASDAQ: RENT) Class A common stock pursuant and/or traceable to the Company’s October 2021 initial public offering (“IPO”). RTR investors have until January 13, 2023 to file a lead plaintiff motion.
Investors suffering losses on their RTR investments are encouraged to contact the Law Offices of Howard G. Smith to discuss their legal rights in this class action at 888-638-4847 or by email to firstname.lastname@example.org.
In October 2021, RTR conducted its IPO, selling 17 million shares of Class A common stock at $21 per share.
On December 8, 2021, RTR announced its third quarter 2021 financial results, disclosing that the Company had suffered a quarterly net loss of $87.8 million while its fulfillment expenses had increased by 75% and its marketing expenses had increased from $1.4 million to $10.8 million. The Company also reported a deceleration in active subscriber growth.
Then, on April 13, 2022, RTR reported that its active subscribers had declined during fourth quarter 2021, while its fulfillment and marketing expenses remained elevated compared to historical trends.
Then, on September 12, 2022, RTR disclosed that it only had 124,131 active subscribers. The Company also announced a “restructuring plan” to reduce costs, which included a 24% workforce reduction.
On this news, RTR’s stock fell $1.91, or 38.7%, to close at $3.02 per share on September 13, 2022, thereby injuring investors.
By October 2022, the price of RTR Class A common stock had fallen below $2 per share, 90% below the IPO price.
The complaint filed in this class action alleges that Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that RTR was continuing to face extraordinary business headwinds, such as transportation headwinds and labor wage rate increases, from the COVID-19 pandemic; (2) that RTR’s active subscriber enrollments had sharply decelerated from the growth trajectory represented in the Registration Statement and, as a result, the Company was several months away from approaching its pre-pandemic levels of active subscriptions; (3) that RTR needed to substantially increase marketing and advertising costs from historical figures in order to attempt to grow its active subscriber network; (4) that RTR was suffering from ballooning fulfillment and transportation costs; and (5) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
If you purchased RTR Class A common stock, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, by telephone at (215) 638-4847, toll-free at (888) 638-4847, or by email to email@example.com, or visit our website at www.howardsmithlaw.com.
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