The way we live, work, and consume is undergoing a seismic shift, driven by advancements in technology, shifting societal norms, and economic forces shaping global markets. Among the boldest predictions about our future is one popularized by the World Economic Forum: By 2030, “You will own nothing, and you’ll be happy.” While this concept may spark debate, its underlying premise signals the growing prominence of a sharing economy where access trumps ownership.
In this envisioned future, traditional ownership models give way to subscription-based services, rentals, and on-demand access to everything from transportation and fashion to housing. For forward-thinking investors, this trend offers a unique opportunity to identify companies poised to thrive in a world driven by access and convenience. Notably, select firms are already paving the way to capitalize on this transition.
In this article, we will take a look at three standout stocks, Rent the Runway (RENT), Mid-America Apartment Communities (MAA), and Lyft (LYFT), that are strategically positioned to benefit from the shift toward a rental-based economy. If you’re an investor seeking opportunities to ride the wave of the aforementioned changes, these stocks deserve a closer look. With that, let’s dive in!
Stock to Buy #1: Rent the Runway
With a market capitalization of $33.2 million, Rent the Runway (RENT) is an online service that rents out fashion items. It allows customers to rent luxury fashion items for a period of time. The company offers a wide range of fashion products, ranging from evening wear to loungewear available through subscription, rental, and resale options.
Shares of the fashion rental company have dropped 29% over the past 52 weeks.
RENT’s Role in the World of 2030
The company’s business model is well-suited to the “You Will Own Nothing” narrative. Rent the Runway provides a subscription membership that allows customers to maintain a rotating selection of designer items at home. The basic plan, priced at $89 per month, allows customers to keep five items from the company at home. Customers can keep these items in their closets for as long as they choose, and then return them to receive replacements. Opting for pricier plans lets customers exchange items more often and gain access to higher-tier products.
RENT also allows customers the opportunity to rent over 750 new designer outfits for various occasions, from vacations to weddings, starting at $35. It provides rental periods of 4 or 8 days, which can be booked up to 4 months in advance.
Finally, the company allows customers to buy thousands of pre-loved styles through its marketplace. It buys most of its clothing wholesale from brand partners. In some instances, Rent the Runway acquires inventory on consignment from brand partners, and occasionally, it contracts for exclusive designs manufactured specifically for its customers.
How Did Rent the Runway Perform in Q3?
Rent the Runway posted its financial results for the third quarter of fiscal 2024 on Dec. 9. The fashion rental company’s quarterly results demonstrated improvements in revenue growth and operational efficiency. Despite this, RENT stock experienced a post-earnings drop of over 21%.
Its revenue grew 4.7% year-over-year to $75.9 million, though slightly missed Wall Street’s expectations. Q3 marked the fourth consecutive quarter of year-over-year revenue growth and the fastest one of the four.
It is also worth mentioning inventory, which represents one of the most critical strategic decisions management makes annually. The company’s 2024 purchases have been very well-received by customers. First, the utilization of new inventory increased significantly, up 530 basis points year-over-year, indicating high customer demand for the new selections. Next, Hearts per Style rose 23.3% year-over-year, demonstrating increased customer desire for the inventory. Finally, the Love Rate for the inventory climbed 800 basis points year-over-year, indicating that customer satisfaction increased once they wore the items. With that, RENT’s focus on inventory optimization has led to significant improvements in customer satisfaction.
Another bright spot of the report was the resurgence in subscriber growth, with the number of active subscribers standing at 132,500, up 1% year-over-year. Also, the company reported a record low free cash flow consumption of $9 million for the nine months ending Oct. 31. In addition, adjusted EBITDA increased to $9.3 million, up from $3.5 million in the same quarter last year. Adjusted EBITDA margin improved by 700 basis points year-over-year to 12%, although it was slightly below the company’s guidance of 13% to 15%. Its net loss per share narrowed to $4.94 from $9.09 a year ago, beating expectations by $0.05.
Still, the company has a challenging balance sheet, making it crucial to achieve breakeven free cash flow as soon as possible. As of Oct. 31, 2024, it had just $74.1 million of cash and cash equivalents, in contrast to $326.7 million in debt.
Looking ahead, management reaffirmed its FY24 guidance, projecting to break even on free cash flow on a full-year basis and anticipating revenue growth of 2%-4% year-over-year.
RENT Valuation and Analysts’ Estimates
Analysts tracking the company expect its net loss to narrow by 44.22% year-over-year to $18.48 per share, while RENT’s revenue is projected to increase by 3.09% year-over-year to $307.40 million.
In terms of valuation, RENT has a forward EV/EBITDA multiple of 7.06x, well below the sector median of 10.54x, which suggests the stock is undervalued at current levels. However, the attractive valuation comes with several risks, including a debt-laden balance sheet and the potential for subscriber churn.
What Do Analysts Expect for RENT Stock?
RENT stock has light coverage on Wall Street, with only two analysts offering recommendations. The stock has a unanimous “Strong Buy” rating, with a mean target price of $30.50, which indicates upside potential of 256.3% from the Jan. 17 closing price.
Stock to Buy #2: Mid-America Apartment Communities
Mid-America Apartment Communities (MAA) is a real estate investment trust specializing in the multi-family residential sector. It develops, redevelops, acquires, and manages apartment communities in the Southeast, Southwest, and Mid-Atlantic regions. As of Sept. 30, 2024, MAA had an ownership interest in 104,469 apartment units across 16 states and the District of Columbia. MAA has been publicly listed for more than 30 years and is a member of the S&P 500 Index ($SPX). Its market cap currently stands at $17.6 billion.
Shares of MAA have climbed 9% over the past 52 weeks.
MAA’s Role in the World of 2030
MAA’s alignment with the “You Will Own Nothing” narrative is evident and has been effectively operating for decades. Residential REITs such as MAA buy and hold properties, and then rent them to tenants under gross lease agreements. Occasionally, they sell properties to upgrade other assets or to fund new, similar purchases, always aiming to boost their investment returns.
Notably, MAA is concentrating its efforts in the high-growth regions of the U.S., specifically in the Sunbelt areas such as Atlanta, Dallas, Tampa, Orlando, and Charlotte. Sunbelt markets have experienced greater population growth compared to traditional Tier 1 markets, and they also offer higher cap rates due to less competition for deals and lower construction costs. This has led to sector-beating performance, with MAA delivering higher annual compounded total shareholder returns than the peer average over the past 5, 10, 15, and 20-year periods.
With that, MAA is attuned to population migration trends, acquiring or developing properties to cater to demand as people relocate in pursuit of employment opportunities and improved lifestyles. This approach positions it to thrive in the world of 2030.
MAA’s Financials
Mid-America Apartment Communities released its most recent quarterly earnings report on Oct. 30. MAA maintains solid portfolio fundamentals, as evidenced by its strong same store portfolio occupancy, which remained unchanged year-over-year at 95.7% during the third quarter. However, it’s important to note that rent growth has significantly decelerated, occasionally remaining flat or turning negative, a stark contrast to the high-growth period following the pandemic when remote work surged in popularity. This trend is reflected by a 0.4% year-over-year decline in average effective rent per unit during Q3, a decrease from the 4.5% year-over-year growth observed in the same period last year. This, along with a 3.0% rise in property operating expenses, led to a 1.7% year-over-year decrease in same store portfolio Net Operating Income. Its core FFO per share was $2.21, surpassing the guidance midpoint by $0.05 and exceeding analysts’ expectations by $0.03.
Meanwhile, throughout 2024, the company leveraged its balance sheet capacity effectively to support future earnings growth. In Q3, MAA added two new projects to its under-construction development pipeline, increasing the total to eight projects. These projects represent 2,762 units with an approximate cost of $978 million. Also, the company acquired a newly built 310-unit multifamily apartment community in an initial lease-up in Orlando, Florida, for approximately $84 million. Notably, MAA boasts an investment grade rating of A3/A- from S&P and Moody’s, underscoring its strength and capability in acquisitions.
The company also has a strong balance sheet. As of Sept. 30, MAA had $805.7 million of combined cash and available capacity under MAALP’s unsecured revolving credit facility. Its net debt to adjusted EBITDA ratio stands at 3.9x, which is very low for a real estate investment company.
Looking ahead, management forecasts full-year core FFO per share at $8.88, marking a 3.2% decrease from $9.17 in 2023.
MAA Valuation, Dividend, and Analysts’ Estimates
Analysts tracking the company forecast a 5.79% year-over-year drop in its core FFO per share to $8.85 for fiscal 2024. Also, Wall Street anticipates MAA’s revenue to grow 2.07% year-over-year to $2.19 billion.
On the dividend side, MAA has a solid history of dividend payments, consistently increasing its dividend for 15 consecutive years and paying dividends for 26 straight years. On Dec. 10, MAA announced a 3.1% increase in its quarterly cash dividend to $1.515 per share, payable to shareholders on Jan. 31. The stock currently yields a respectable 4.12%. It also boasts a 3-year dividend CAGR of 12.49%, significantly higher than the sector median of 3.71%.
In terms of valuation, the stock’s forward price-to-FFO ratio of 17.01x looks appealing. While it exceeds the sector median of 13.37x, it remains lower than several other residential REITs in the S&P 500.
What Do Analysts Expect for MAA Stock?
Analysts have a consensus rating of “Moderate Buy” on MAA stock, with a mean target price of $165.26, which indicates upside potential of 9.8% from the stock’s Jan. 17 close. Out of the 26 analysts offering recommendations for the stock, 10 rate it as a “Strong Buy,” one advises a “Moderate Buy,” 12 suggest a “Hold,” and the remaining three give a “Strong Sell” rating.
Stock to Buy #3: Lyft
Valued at a market cap of $5.6 billion, Lyft (LYFT) is a ride-hailing company dedicated to providing the world’s best transportation. The company operates a multimodal transportation network, which includes a ride-hailing marketplace that connects drivers with riders through the Lyft mobile app, along with micro-mobility options such as bikes, e-bikes, and scooters. It serves about 95% of the population in the United States and is also available in several Canadian cities.
Shares of the ride-share company have gained 5.2% over the past 52 weeks.
LYFT’s Role in the World of 2030
LYFT’s ride-hailing business model aligns perfectly with the “You Will Own Nothing” narrative and has already demonstrated its effectiveness. So, you don’t need to own a car or have driving skills to travel comfortably from point A to point B; you can simply “rent” the car with a driver for your journey. The platform that Lyft has developed, featuring extensive user networks, strong branding, and seamless payment and routing systems, delivers immense value to customers in 2025 and is poised to continue doing so in the world of 2030.
LYFT Soars on Upbeat Q3 Results and Guidance Raise
On Nov. 7, LYFT stock surged over 22% after the company posted strong Q3 results and boosted its full-year guidance. Lyft’s revenue grew 32% year-over-year to $1.52 billion, smashing Wall Street’s estimates by $80 million. This surge was fueled by a rise in the number of rides and active riders on a year-over-year basis. Notably, both active riders and rides reached new all-time highs in Q3, standing at 24.4 million and 217 million, respectively.
Lyft also benefited from an increase in gross bookings. This key metric, defined by management, represents the total dollar value of transactions invoiced to riders, excluding taxes, fees, and tips. During the quarter, the company reported $4.1 billion worth of gross bookings, up 16% year-over-year. The continued gap between revenue growth and bookings growth highlights Lyft’s increasing take rates.
On the profitability front, most metrics demonstrated improvement. Better revenue margins, coupled with operating expenses growing in line with revenue, facilitated a 17% year-over-year increase in adjusted EBITDA to $107.3 million. Notably, adjusted EBITDA as a percentage of gross bookings remained unchanged sequentially and year-over-year at 2.6%. Also, operational cash flow soared to $264 million, marking a dramatic rise from merely $2.3 million in the same quarter the previous year, and free cash flow turned positive at $242.8 million from a negative $30.0 million a year ago. However, on an unadjusted per-share basis, Lyft reported a loss of $0.03, swinging from a profit in the previous quarter, but this was in line with expectations.
Another highlight of the third quarter was the company’s partnerships. The company struck a new partnership with DoorDash (DASH) to offer ride-hailing discounts to DashPass subscribers and secured deals to launch autonomous ride-hailing in 2025.
Looking ahead, Lyft projects 15%-17% year-over-year growth in gross bookings for Q4, marking a departure from the trend of signaling deceleration. For the full year, the company anticipates rides growth to be in the mid-teens. Also, adjusted EBITDA margin guidance was raised to approximately 2.3% from the prior outlook of 2.1%.
LYFT Valuation and Analysts’ Estimates
According to Wall Street estimates, LYFT is expected to post a 109.38% year-over-year GAAP EPS growth to $0.06 in FY24. Also, analysts anticipate a 31.37% year-over-year increase in the company’s revenue to $5.79 billion.
From a valuation standpoint, LYFT stock is cheap. LYFT trades at a forward EV/Sales ratio of 0.84x, well below the sector median of 2.02x, and notably lower than Uber’s (UBER) ratio of 3.28x. With that, the EV/Sales multiple suggests that Lyft is considerably undervalued. Moreover, I believe Lyft’s strong performance in the recent quarter suggests that it may deserve a higher valuation multiple, particularly if it can achieve an acceleration in gross bookings growth in Q4.
What Do Analysts Expect for LYFT Stock?
Analysts have deemed Lyft stock a “Moderate Buy,” with an average price target of $18.87, which indicates upside potential of about 40.7% from Friday’s closing price. Among the 37 analysts covering the stock, seven recommend a “Strong Buy,” two advise a “Moderate Buy,” and the remaining 28 give a “Hold” rating.
