Working to understand rent the Runway’s IPO valuation

When you file to go public, you want the numbers to look good. You do not want others to make fun of the figures. WeWork’s first attempt at the public markets was the extreme form of this evident fact. The IPO was finally withdrawn as everyone considered the results to ludicrous. Box’s initial effort at going public elicited a more moderate — but nonetheless hostile — response.

Both firms eventually went public, with Box doing so through traditional channels and WeWork having to rely on a SPAC to get it there. No, I am not attempting to draw any commercial parallels between Box (a software firm led by a rational person) and WeWork (non-software business run by a person slightly less trustworthy than Aaron Levie).

Rent the Runway’s IPO filing is a more contemporary example of those who are not fond of numbers. From a business standpoint, the firm — a smart business idea that has attracted a significant user base over time — is not perfect. If you don’t want to read Rent the Runway’s IPO filing or our notes on its data, the idea is that the depreciation expenses associated with the apparel that the firm rents to consumers appear to be sufficiently high to render the company’s entire business profile shaky.

Working to understand rent the Runway’s IPO valuation

Rent the Runway countered this appearance by providing adjusted profitability data that did not include inventory depreciation. It was not a popular decision. Simply said, when we analyze the whole range of expenditures connected with delivering its service and running its business, rent the Runway looks to be undercharging for its goods.

Regardless of our reservations, the company’s first IPO price range puts the company’s valuation at more than $1 billion, making its IPO a unicorn debut. As a result, we must take it seriously. Let us quickly compute the company’s IPO value range, the resultant multiples, and compare it to a comparable firm this morning to get a sense of what the market is saying about the fashion rental unicorn.

I have put off investing in my looks for far too long as an unfashionable lazy. This was mostly due to my being a jerk and a bore, but it was also due to my intellectual laziness. Humans, in actuality, enjoy expressing themselves via attire, both physical (clothing, cosmetics, etc.) and virtual (websites, social media, etc). (Character skins, NFTs, etc.). In addition, they will go to great lengths to be attractive.

I would venture to say that the desire to seem nice in both the actual and digital spheres closely connected, if not identical. As a result, the beating core of League of Legends’ business model (in-game cosmetics) and Rent the Runway’s (renting stylish clothing) should receive equal attention. That is to say, we are not ridiculing what Rent the Runway wants to achieve or the market need it is attempting to satisfy if we make some critical observations about specific aspects of its commercial outcomes. Instead, we are pointing out that Rent may be undercharging for services, which throw certain statistics off.