(RENT) starts trading on the Nasdaq

Rent the Runway began trading Wednesday at $ 23 a share, up 9% from its original $ 21 public offering price.

This gave the fashion rental platform a fully watered-down value of roughly $ 1.7 billion. And the stock continued to rally during its market debut, having recently gained more than 11%.

On Tuesday, Rent the Runway’s IPO price was at the upper end of the expected range. 17 million shares were sold at $ 21 each, after 15 million shares were sold at prices ranging from $ 18 to $ 21.

The listing follows the public debut of eyewear maker Warby Parker and ahead of the anticipated IPO of the sneaker retailer Allbirds. Wall Street has seen a wave of trendy, venture-backed retailers whetting investor appetites.

Founded in 2008, Rent the Runway is in the midst of a renaissance after demand for its clothing subscription service dropped in 2020. Its valuation dropped to about $ 750 million last year as the pandemic impacted Rent the Runway’s ability to attract users.

Rent the Runway’s active subscribers in 2020 fell to about 55,000 from 133,000 a year earlier. Revenue fell 39% to $ 157.5 million. While its net loss increased to $ 171.1 million from $ 153.9 million in 2019.

However, according to CEO Jennifer Hyman, the health crisis ultimately helped make her business more resilient.

“If anything, this pandemic has further pushed us as consumers to share models and value experience over ownership,” Hyman said in an interview with CNBC’s Squawk Box. “We’ve seen this with our customer base.”

Rent the Runway, which describes itself as a “closet in the cloud,” had to get creative to stay afloat when few consumers were looking for clothes to wear from home. He closed his stores and scrapped his subscription plans, canceling the unlimited option. It also entered the resale market, which allowed consumers to shop without a membership.

“This is an incredible flow of new customers to sign up,” Hyman said of the resale opportunity. “This is how we look at our special event rental business … It’s a way to introduce a new customer to the value of our range and how easy it is to come to rent a runway.”

The company now sees that its growth is not entirely dependent on the return of women to offices.

“The women didn’t have to go back to the office to get back to Rent the Runway,” Hyman said. “And since women do return to the office, even if it’s only a few days a week, or return to a party, this remains a positive thing for business.”

Hyman added that 90% of the company’s clients continue to work from home, but the number of subscribers is growing.

Subscribers return

Instead, a return to social gatherings such as weddings, galas and birthday celebrations is helping to rebuild Rent the Runway.

The company averaged about 98,000 active subscribers in the six months ended July 31, up from about 54,000 in the same period in 2020. By September, the number of active subscribers had grown to 112,000, according to the latest securities filing.

Today, subscribers account for over 80% of Rent the Runway’s revenue. As an example of one subscription option, a subscriber might rent eight items per month at a monthly rate of $ 99 for the first two months, then $ 135 for each month thereafter. Rent the Runway offers options from over 700 brands.

“It’s about renting a coat to walk around the neighborhood, or putting on clothes to relax at home … and then go out to dinner with a friend,” Hyman said in a telephone interview. “As we expanded this range, we saw her interact with us more and more days of the year.”

The IPO also offers Wall Street another barometer to gauge investor appetite for the clothing rental business. Rent the Runway joins other public companies Poshmark, The RealReal, and ThredUp, which sell used clothing and other accessories.

Rent the Runway plans to use the capital raised during its debut to pursue expansion opportunities, including international growth and launch into new categories, Hyman said.

The IPO was conducted by Goldman Sachs, Morgan Stanley and Barclays.

Runway rental is CNBC Disruptor 50 Company.

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