Rent the Runway stock dips on Q4 earnings

Yahoo Finance Live’s Brian Sozzi and Jared Blikre discuss stock performance for Rent the Runway amid fourth quarter earnings data.

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BRIAN SOZZI: And there we have that opening bell over at the NASDAQ and the New York Stock Exchange. Maybe they're all clapping, Jared, because that big deal by Elon Musk for Twitter. But who knows? You're seeing the markets there right now open in the green after some early pre-market weakness. Now we could sit all day, Jared, and spend time on Twitter and--

JARED BLIKRE: Good.

BRIAN SOZZI: --Elon Musk-- and we will. And we will. Lots more coming up, but let's look at Rite Aid here. Rite Aid shares are on the move after coming out with a quarter here, pretty good. I would say it was pretty good, Jared. Same store sales up 8.3%. They noted they're closing 145 stores. But Rite Aid last week was a battleground stock. The stock absolutely got obliterated because he had a note out from Deutsche Bank, I believe, questioning if the company could even stay in business.

Now, some of the numbers they put forth today, I think, fits very well to what that Deutsche Bank analyst was writing last week about the company's liquidity position. You scroll down on this earnings release, you see RiteAid with over $2 billion in debt and $39 million in cash. Maybe Elon Musk should be trying to save Rite Aid.

JARED BLIKRE: I'll tell you what. Let's go to the YFi Interactive again because I have a 10-year chart of Rite Aid, and you're going to notice we are at the very bottom end of that range. A going concern? Well, I think there are some concerns about whether that is going to continue to be the case. And as I told you during the break, I was surprised to learn that Rite Aid still has 2,500 locations across the US. This is not a small company.

And by the way, we were just taking a look at a 10-year chart. You take a look at a max chart-- it is stunning at where the stock used to be. And I'm thinking there must have been a number of reverse splits since then. But we're looking at a price of something like $1,000 per share in the late '90s. I don't think they got caught up in the tech boom.

BRIAN SOZZI: It Devin Sears, Jared. It was Devin Sears just duking it out for market share amongst people.

JARED BLIKRE: There you go. Yeah, I'm going to leave it there. I have no more comment on Rite Aid at this point.

BRIAN SOZZI: Well, let's stay kind of on the retail sector. Rent the Runway doing better than Rite Aid, but not that much. The company out there losing about $39 million in its most recent quarter for the current year. They're looking for about a negative operating margin as well. And here's another company, Jared, I would lump in with Stitch Fix, which is just performing absolutely terribly as a public company. There you have Rent the Runway's results just not really living up to expectations.

Let's keep in mind, in October 2021, Rent the Runway becomes public, much fanfare. They're going to change the world and how people consume clothes. $21 per share offer price stocks, under $6 now. Just another new age retail model that hasn't worked.

And I have to highlight this tweet from our very own Julie Hyman, who's been on assignment for us this week, Jared. She's a Rent the Runway user. And because of inflationary pressures, there's Julie putting out her concerns about rising inflation or rising costs to use Rent the Runway. 18%-- that is a big price hike. That outpaced the CPI, Jared.

JARED BLIKRE: I know her. I know this person. You know what? Rent the Runway has some fanatics in its customer base. And I think it's a well-run company from that regard. But the stock has done, I think it's off something like 70% from its opening trade. Now I do have some commentary from analysts on the Street. Here's Barclays, and they're noting-- they're honing in on this paused subscriptions.

So in other words, if you subscribe to Rent the Runway, you can pause that subscription. That is on the rise here. It grew by over 30% quarter over quarter to 44,000. That is the highest since the second quarter of 2020. Well, what was happening in the second quarter of 2020, everybody was locked down literally. And if this is the highest number since then, and it beats that number, it gives me a little bit of a concern for the subscribers going forward. At what point do those pause subscriptions turn into cancelations? So that would be my concern with this right there.

BRIAN SOZZI: Bottom line, another next age retailer not making any money and its stock below $10 because of that fun fact. Last but not least, Jared, I'll just quickly mention as we gear up for the quick break here, Airbnb shares really over the past 24 hours have been one of the hottest tickers on the Yahoo Finance platform. What does that mean?

A lot of people going to these ticker pages, looking to see Airbnb's fundamentals, what they might be working on. Really, the stock has been on a very nice run over the past month. Shares are up 20%. And look, what we heard from Delta this week about a travel recovery here, it's no small surprise that you hear Delta, when they report earnings, come out and say bullish things on the return to travel. And you see Airbnb shares-- pardon the pun-- take off.