Rent the Runway Inc. is on track to notch a record one-day jump after reporting earnings that beat investor expectations and stoked hopes that the clothing-rental company can turn itself around.

The stock surged as much as 226 percent in intraday trading Thursday after the company reported fourth-quarter revenue and adjusted earnings that beat Wall Street expectations.

“Execution will be key among all this, but we think the business model has legs,” Bloomberg Intelligence analyst Poonam Goyal said.

Goyal added that return to work and new offerings for everyday wear in addition to party and formal attire should help the company maintain subscribers over time.

The quarterly report was a breath of fresh air for the company after investors had mostly given up on it. Rent the Runway has been under pressure since the Covid-19 pandemic and working from home shifted consumer fashion trends. Even as workers returned to the office, Rent the Runway struggled to keep subscribers due to a mismatch in inventory.

It reported a 35 percent decrease in churn from users who primarily cited inventory as a reason for not returning, according to JMP Securities analysts led by Andrew Boone in a Thursday note.

Boone also praised Rent the Runway for improving its website.

“With a faster and more functional site, the consumer experience is also better, positioning the company well to grow subscribers in 2024,” he wrote, adding that the business feels more stable today. Boone maintained a market outperform rating on shares.

Still, even with Thursday’s move, Rent the Runway shares are down roughly 95 percent since its public debut in October 2021. Just last week, the company implemented a 1-for-20 reverse stock split in order to increase the per share price of its stock to regain compliance with the minimum required for continued listing on the Nasdaq Capital Market.

Nasdaq told Rent the Runway in late March that it was at risk of being delisted if its market value didn’t close at or above $35 million for a minimum of 10 consecutive business days before Sept. 23.

Shares will likely be choppy in the next three to six months, said BI’s Goyal, but she still sees the company as being “on the right track” with subscriber growth.

By Katrina Compoli and Carmen Reinicke

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Rent the Runway Lays Off 10% of Corporate Staff

The restructuring will allow the company to direct more resources toward growth, CEO Jennifer Hyman said.