(WRBY) starts trading on the NYSE
The eyewear start-up Warby Parker is set to begin trading Wednesday morning via a direct listing, testing investors’ appetite for a household direct-to-consumer retail name.
Under the ticker symbol “WRBY”, the stock will trade at the New York Stock Exchange.
Warby Parker joins such names as Spotify, Roblox and Coinbase that have also gone public through a direct listing, rather than an initial public offering. A direct listing does not allow companies to borrow capital. Instead, it lists its shares on an exchange, and the shares begin trading at a price set through negotiation between the company and public investors. Insiders can sell their shares at will.
The NYSE set a reference price of $40 on Tuesday night based on previous trades on private markets, but ultimately the publicly listed price was based on investor demand. Based on the outstanding shares, that would mean the company’s market value is approximately $4.5 billion. According to filings, the shares of Warby Parker had been trading privately at $24.53 in April.
Warby Parker began sending glasses to customers to test on their own and then to purchase what they liked. In order to compensate for the large expenses associated with an extensive e-commerce site, Warby Parker has opened up new stores. It launched daily contact lenses in 2019.
“We have less than 1% of market share in this massive category, and see huge tailwinds to grow our top line and our bottom line in the years to come,” said Dave Gilboa, co-founder and co-CEO, on “Squawk Box” Wednesday.
He said that there is so much potential to expand our retail presence and also our ecommerce offerings.
While Warby Parker sales have increased in recent years and its profits have decreased, they have also seen their losses increase over the past few years. Its net revenue in the fiscal year that ended Dec. 31 2020 grew to $393.7 million from $370.5 million in 2019, according to documents filed with the Securities and Exchange Commission. Warby Parker lost $55.9 million in 2020, two years after it broke even.
Warby Parker continued to lose cash in recent months. In the six-month period ending June 30, Warby Parker lost $7.3million.
One of the eyeglass maker’s largest investments in the coming years will be in bricks-and-mortar growth, which Warby Parker hopes will fuel earnings. The company expects that revenue will continue to grow, but it has yet not revealed the date when it may become financially profitable.
It plans to open between 30 and 35 stores in fiscal 2021. That would increase its shop count from 155-160 locations.
Although Warby Parker stores were temporarily closed during the pandemic and have since enjoyed a strong digital presence. Many people are shopping online more than ever before. According to filings from Warby Parker, roughly 50% of Warby Parker sales were made online in the first six month of 2018, compared to 60% last year.
Gilboa stated that “Ultimately, we don’t care about where customers transact.” We want our customers to enjoy the best shopping experience.
Warby Parker also plans to expand into other categories. About 95% of Warby Parker’s sales last year were glasses. 2% was from contacts lenses and 1% came from eye exams. 2% was from eyewear accessories.
Neil Blumenthal is co-founder, and also co-CEO. He sees opportunities to grow in these other areas.
Contact lenses account for 2%, but the market is worth more than $5 billion. “Same with eye exams … 1% of our business, but it’s also a $5 billion-dollar plus [market]. We have huge potential in the future.
Warby Parker anticipates that its fiscal third-quarter will conclude on Thursday. It expects net revenue to be between $131 and $133 millions, an increase of 26 to 28 percent from 2020.
It expects that sales will reach $532 million-$537 million for the entire year. Warby Parker projects that its net revenue for fiscal 2022 will be at least 25% higher than the year before.
Warby Parker’s Direct Listing will enable registered stockholders the ability to sell Class A shares worth 77.7M, without any company proceeds.
This is a developing story. Stay tuned for new updates.
Warby Parker is a four-time CNBC Disruptor 50 company.
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