Reuters Warby Parker: Look at the stock market novice
Consumer-direct glasses expert Warby Parker (WRBY) made a splash on its first day on the New York Stock Exchange.
On Wednesday, the company saw widespread gains in its first morning trading. Before the end of the day, the stock was 30% higher than its initial asking price.
Let us be one of the new Titans on Wall Street. I find myself moderately enthusiastic over Warby Parker, mainly because of what it did before it went public. (See Warby Parker stock chart at TipRanks)
Past performance is not a guarantee of future performance. Often any prospectus will clarify what existed. The ever-changing market conditions mean that there could be a recession at any time. Worse, this recession may have very little to do with the organization itself.
For Warby Parker, past performances give us something to work with.
Warby Parker has made a name for itself in the power of its basic operating proposal: cheap, attractive glasses with spectacular customer service.
Warby Parker originated in 2010, when students at Wharton School noticed that getting glasses was a pretty basic proposition. A few big names in glasses will make a huge amount of glasses. The glasses were then sold in large quantities in optical stores. That’s when Warby Parker stirred things up.
Warby Parker has allowed customers to send spectacle frames to their homes. Then, once the customer finds his choice, buy from there. If the lenses are scratched within the first year, the company backs up its product with free replacement.
The company has also added a social element to its work. The company has donated one pair of glasses for each pair sold. It also worked to train volunteers to give eye tests to communities in need. As a result, the company considers itself a public benefit corporation.
It is true that Warby Parker’s reputation as a public benefit corporation could have an impact on the bottom line. Its various people-centric initiatives such as offering free products just don’t help the profits.
However, Warby Parker’s public focus will probably pay off in much more valuable currencies: good luck. Gifting means each item represents half of its profits. This means that people remember names.
Warby Parker is trying to make a name for himself in what was previously a province of large-scale optical operations.
There is significant interest that shows a huge run up in its share price on Wednesday. Private investors may want to wait for that initial outburst. When it is, a more reasonable price point may come with it.
Disclosure: At the time of disclosure, Steve Anderson was not in any of the securities mentioned in this article.
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