Fashion meets AI

Hey Superheroes,

Markets seem to have some PTSD from high inflation. As soon as U.S. inflation data showed a third consecutive month of increase, global markets plunged into the red.

While both the ASX and Wall Street have since rebounded slightly, all attention is still on interest rates – will the Fed’s estimated three rate cuts this year still be probable?

Anyways let’s get to it!

Rent the Runway soars over 160%

Did it ever occur to you that stock exchanges have minimum market value requirements for a stock to remain listed? If a company trades below that minimum for several consecutive days, they risk getting automatically delisted.

Well, that’s what almost happened to Rent the Runway a few weeks ago, when it got a love letter from the Nasdaq stating that its market value was too low.

Fortunately for the fashionistas, Rent the Runway seems to have survived that dilemma with style.

💃 Haute Business

Rent the Runway (NASDAQ:RENT) soared more than 160% overnight after reporting that it expected to become a “free cash flow breakeven” company by this year.

Focused on improving customer experience, Rent the Runway cited that it was using AI to assist with improving search functions, photography and styling.

The fashion company operates on a subscription-based business model, but had previously struggled with high subscriber churns due to inventory issues. Its share price was down over 98% since its IPO and it was thought that investors had largely given up on the business.

Rent the Runway is up 267% over the last week.  Some analysts attribute this surge primarily to the growing frenzy around AI technology.

Qantas releases new tier of rewards seats

One of this week’s trending stories: Qantas’ new “Classic Plus” rewards seats.

It’s not just news for wanderlusts but for investors too. Qantas Loyalty, its segment that deals with all things regarding Qantas Points and rewards, is the airline’s most profitable segment.

✈️ Happy customers = Happy flights

Qantas’ new “Classic Plus” rewards seats creates a new tier of redemption options.

Unlike the highly-limited “Classic Rewards” seats, which have a set points value for flights or the flexible “Points Plus Pay” option where points can be converted into dollars, the new “Classic Plus” seats are like a happy middle ground. They’re easier to get than Classic Rewards, but with better value than with Points Plus Pay.

One of the major complaints around the airline was the difficulty in finding uses for its rewards points. In the last two years, the amount of Qantas Points earned by members exceeded the amount used by almost 50 billion.

💰 Most profitable segment

The new rewards system is expected to increase customer satisfaction at the cost of about A$120M next financial year.

Despite that, it saves more than choosing to issue more Classic Rewards seats – Classic Plus values 1 point at a high of 1.5¢, while Classic Rewards can bring 1 point to a value of 4¢.

Last year, Qantas Loyalty had an operating margin of 20.6%, compared to Qantas Domestic’s 18.2%, Qantas International’s 11.7% and Jetstar’s 9.5%.

🔦  Some Other Things We’re Shining The Spotlight On:

• THREE TIMES IS NOT THE CHARM: U.S. inflation ticked up to 3.50% in the 12 months to March – up from 3.20% in February and above analyst expectations of 3.40%. This outcome is one of the factors the Fed will look at at the next Fed Funds rate meeting at the end of this month.
• NETWEALTH GROWS NET WEALTH: Netwealth recorded a A$6.7B increase in funds under administration in the March quarter, thanks to positive net inflows and market movements. Netwealth shares are up over 59% since markets started its rally in November.
• AUSTAL’S SOUTH KOREAN SUITOR: Austal may have rejected Hanwha’s takeover bid of A$1 billion earlier this month, but it looks like the South Korean conglomerate isn’t giving up. There are talks that Hanwha may start getting in contact with Austal’s largest shareholders to gain support.

That’s all for this week’s Spotlight! Wall Street’s Quarterly earnings is set to kick off next week, with Netflix scheduled for a release on Thursday.

Keep up to date with market news and insights by following us on Instagram, @superheroau!