Grosescu Alberto Mihai/iStock via Getty Images Well, it's pretty safe to say that the small-cap IPO hype is over. A tremendous number of companies cashed in on investors euphoria amid the pandemic, but now, with interest rates persistently high and a tough macro climate on the horizon, investors have shifted back into safety mode. Against this backdrop, Rent the Runway ( NASDAQ: RENT ) has shed hundreds of millions of market value.
But year to date, the stock has already tripled, driven in no small part by the recent resurgence of "meme" stocks. But while as a small cap, Rent the Runway has a reputation to be clubbed in with other speculative trades, I do think there is a real fundamental business case to assess here. Data by YCharts I'll cut to the chase here: while I'm certainly not betting the farm on this stock, I'm encouraged by A) the stock's recent rally and B) the company's recent return to growth and improving profitability, and am initiating Rent the Runway at a buy rating.
The next catalyst for the company is its Q1 earnings release, currently scheduled for June 6. How does Rent the Runway Work? The company fills a void that leading e-commerce names don't fill today Simply put, Rent the Runway offers a subscription membership to keep a rotating closet of designer items at home. The snapshot below shows the company's three core subscription membership plans: Rent the Runway subscriptions (Rent the Runway) The basic $89/month plan allows customers to have five of Ren.