WRBY - Warby Parker: Impressive Recent Progress But Not Undervalued
2024-02-25 07:23:31 ET
Summary
- Warby’s growth has been strong. This is a reflection of its modern approach to a mature industry, with e-commerce and social actions at the core of its vision.
- Investors are concerned by its ability to maintain growth and achieve sufficient margin improvement. We have these same concerns to a lesser extent, albeit Warby does continue to outperform.
- With Warby increasingly driving growth through new locations, alongside the compounding benefits from active customers, it can push toward growth of double-digits, although peers are innovating.
- The company has scope to outgrow its peers while reaching margin parity, although this will take numerous years. The company requires economies of scale, and so growth is key.
- Warby’s valuation does not imply upside despite the collapse in share price, reflecting execution risk and the delta to its peers.
Investment thesis
Our current investment thesis is:...
Warby Parker: Impressive Recent Progress But Not Undervalued