It feels like Warby Parker (WRBY) is a little late to the IPO party but they did have to deal with a sudden stop of retail traffic due to COVID in 2020. Now that things are mostly back to normal Warby is seeing solid YoY growth and set to continue to expand their market share in the very large market for eyeglasses.

To their credit, they have built a real brand in this business which is definitely an asset. The question is really how much of a sustainable advantage has in this market (if any) and what valuation is most appropriate.

Sometimes I see an IPO that I really want to own almost irrespective of price – names like Twilio (TWLO), Schrodinger (SDGR), Workiva (WK), Goosehead Insurance (GSHD), UpStart (UPST), and many others that have been in our portfolios are some examples. Warby Parker doesn’t engender any of those feelings for me.

Below you’ll find some comparable companies to explore if you remain interested in WRBY stock. The reasons I’m passing on this one are:

  • There is a giant incumbant here with resources to respond to innovation and defend market share. Essilorluxottica is a very strong competitor and just because they are big doesn’t mean they can’t execute.
  • Although Warby has ushered in some innovation in this market much of what they offer seems easy to do now. Companies like Roka and Eyebobs have great offerings. There are plenty of others but I’m familiar with both of these.
  • I don’t know what the brand will mean in few years. Will it be more fashion or eye-care? There is no such confusion with companies like Yeti (YETI) and many others in the table below.
  • Since Warby Parker is building out their physical store network investors have to wrestle with how to weigh that. It’s one thing to open a store or two in major urban locations as a kind of showcase but quite another to make retail part of the strategy.

I’ll close with the comps table below so you can draw your own conclusion. The values for WRBY are based on the current price this morning which is around $53/share. We will have this one in our “Elite Consumer” group but will just watch it and see how they execute.

Some Comps for WRBY

Leave a Reply