The subscription-based e-tailer expects to save $25 to $27 million in costs
Shares of Rent the Runway (NASDAQ:RENT) are plummeting this morning, after the e-tail concern announced it will lay off 24% of its corporate workforce amid a decline in subscribers and a shaky macro environment. The company expects the restructuring plan to save them between $25 and $27 million. Rent the Runway also turned in its second-quarter earnings report, and while its top and bottom lines beat expectations, the firm lowered its 2022 revenue forecast. At last glance, RENT was down 30.8% at $3.41.
Prior to today's dismal price action, RENT was on the up-and-up, bouncing off the $3.75 mark and stringing together four-consecutive daily wins. The equity opened well below this recent pivot point, however, as it adds to its 39.5% year-to-date deficit.
Analysts have swarmed the security with bear notes. Credit Suisse downgraded RENT to "neutral" from "outperform." Plus, no less than seven analysts have lowered their price targets -- the lowest coming from Credit Suisse down to $4 from $7.
Even more downgrades and/or price-target cuts could be on the way. The 12-month consensus price target of $8.60 is a 152.9% premium to current levels. Plus, just one of the nine analysts in coverage called the stock a "hold," compared to eight "buy" or better ratings.
Short sellers have been jumping ship, down 13.5% in the last two reporting periods, but bears are still firmly in control. Short interest makes up 13.9% of the stock's available float, or eight days' worth of pent-up buying power.