Warby Parker, D2C specs purveyor, files to go public. Does Warby Parker have a clear vision for its future growth?
Did you miss IPOs? I sure did. After a summer hiatus, they could be back.
Warby Parker, D2C glasses manufacturer, filed yesterday to go public. It is backed by more than half a billion dollars in private capital. It is a significant debut for investors such as General Catalyst and Tiger Global. Since at least 2011, investors have waited patiently for Warby's float.
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There is a lot to love about the company as the first part of its IPO filing reveals. We need to discuss the negative aspects of its business and how COVID-19 affected its 2020 performance.
Warby raised private capital for the first time in August 2020. It was a $120m Series G which valued Warby at just over $3B on a post-money basis. D1 Capital Partners was responsible for the transaction that included Durable Capital as well as Baillie Gifford.
The Warby IPO represents a resounding success for D2C startups. Casper's IPO in early 2020 is a warning sign for businesses that use the business model. The company decreased its IPO range to $12 per share, and now trades at just $5.
Warby Parkers IPO is not limited to the D2C market. It is a public benefit corporation which, according to the filing, means it is focused on positive impacting all stakeholders and not just shareholders. The company also has a charitable bent, giving away free eyewear to customers who purchase it through its foundation and donation model. Warby has also developed a hybrid sales model that combines both IRL and online retail channels. There are many things to explore.
Let's look at Warbys growth, profitability and how it is combining IRL shopping with digital channels. We can get close to the truth by looking at how Warbys was priced last year and speculating on its potential value in today's public markets.
Historical growth of Warby Parkers
It is hard to see Warby's 2020 full-year results. The company saw a 36% increase in revenue between 2018 and 2019, from $272.9 to $370.5 million, which is approximately 36%. This is not a remarkable rate of growth but it's still quite respectable considering Warbys age.
In 2020, the company managed to only achieve 6% growth to reach $393.7million in top line. What caused the company's growth to drop from Just Fine to None at All? It appears that COVID is the culprit.
