Home Fashion glasses Is Warby Parker’s recent IPO a buy?

Is Warby Parker’s recent IPO a buy?

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There have been a record number of IPOs so far in 2021, far beyond what you might imagine: a grand total of 800 IPOs at the time of writing. This is approaching double the 2020 figure of 480, which was itself a higher record than the total of 397 in 2000.

There are many factors that could affect this IPO craze. Either way, it opens up a lot of opportunities for investors. At the same time, there may be only a handful of new stocks on the market that end up becoming great investments, making it all the more difficult to determine where it is worth investing in. ‘invest your money.

One of the most well-known companies to hit the market this year is the eyewear maker Warby parker (NYSE: WRBY), which was released just three weeks ago. Its stock initially fell but has since rebounded. Is it just general market volatility? And is it a buying opportunity?

Image source: Getty Images.

Better shopping experience

Warby Parker operates on a simple but compelling model. Founders Neil Blumenthal and Dave Gilboa couldn’t understand why designer glasses were so expensive and believed they could provide a quality pair for a lot less money, straight from the manufacturer. So, in 2010, Warby Parker was born, and it was a fairly immediate success.

Revenue was $ 487 million in 2020, an impressive 33% year-over-year increase given that it was during the pandemic. Its digital-centric approach was a big factor in its success last year when people stayed home, and it was especially noticeable because people weren’t spending on extras, such as sunglasses. fashion, or did not go out for non-essential eye exams. It serves 55 markets and operates 145 physical stores.

It breaks the boundaries of traditional eyewear retailing in several ways. The company offers free at-home trials, which means it sends customers a collection to try, and they can return the ones they don’t want as well as the ones they want to prepare with a prescription. It also has virtual testing technology on the website.

Warby Parker has over 2 million active customers and a Net Promoter Score (NPS) of 83, indicating customer satisfaction in an industry with an average NPS of 30. It also has a customer retention rate of nearly 100% after 48 months.

The company also has a social component with its Get a Pair, Give a Pair program. It has donated 8 million pairs to people in need since its inception, and says it has generated $ 1 billion in revenue for those people.

Growth opportunities

The company says there is a $ 140 billion global eyewear market, including $ 35 billion in the United States, where 200 million Americans are in need of some kind of vision correction. And that number is growing at a projected compound annual rate of 9.2%, giving Warby Parker a consistent way to grow its business. He also cites the rise of telehealth and e-commerce as trends that are expected to boost his sales.

As for its own growth initiatives, there are several. It is expanding its retail presence, seeking to penetrate international markets, modernizing its technological and digital infrastructure, improving its product design and strengthening its vision care options.

It seems to me that the company has a robust model generating healthy growth and a visionary mindset, both signs of a good investment.

Will its stock continue to increase?

Warby Parker stock initially sank, but is now on the rise, exceeding the IPO price at the time of writing. I think there is a lot of potential here, with a great market opportunity, growing sales and an innovative approach. Management has shown that they can think beyond the typical and do things better, and I think we can expect a lot from Warby Parker.

There are a few caveats here. First, selling eyeglasses, even in a better form, is not that different from any other eyeglass seller. I would like to see Warby Parker show a more lateral thinking. Second, the company is still making losses. I’ll wait and see how that goes in its first quarter as a public company. But investors should keep this stock on their watch lists.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.