Why Warby Parker Stock Is Plummeting Today
Key Points
Warby Parker missed Wall Street's sales expectations during the third quarter.
However, sales grew by 15% and the company's margins improved.
While the market was dismayed by Warby Parker's Q3, its operations appeared only to grow more robust.
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Shares of direct-to-consumer eyewear and vision innovator Warby Parker (NYSE: WRBY) are down 15% as of 11 a.m. ET on Thursday, according to data provided by S&P Global Market Intelligence.
Warby Parker reported third-quarter earnings on Thursday morning and grew:
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- active customers by 9%
- sales by 15%
- adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 53%
- net income by 68%
Despite its operations scaling well and its margin profile improving, Warby Parker missed Wall Street's revenue expectations in Q3, so the stock sold off.
Overall, everything looked fine operationally for Warby Parker, so investors should not panic about the market's overreaction to 90 days' worth of data.
Is Warby Parker a buy-the-dip opportunity?
There is a lot to like about Warby Parker -- especially now that it is 42% below its one-year high. The company is actively trying to disrupt the $68 billion U.S. eyewear industry, and despite its steady growth, has only cornered 1% of the market. This tiny market share leaves a massive growth opportunity ahead if it can continue succeeding.
Furthermore, its recent partnership with Alphabet and Samsung Electronics to develop AI-powered glasses opens up a brand-new world of possibilities for the company.
Image source: Getty Images.
That said, Warby Parker still has to battle EssilorLuxottica Société Anonyme and its near monopoly in the glasses industry. Furthermore, its new AI-powered eyewear will run right up against Meta Platforms and EssilorLuxottica's Ray-Ban smartglasses, so Warby Parker remains the underdog story.
Now trading at 2.5 times sales -- slightly above all-time lows of 1.8 -- Warby Parker could be a steal if it can continue to garner market share -- especially with its smartglasses upside potential.
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Josh Kohn-Lindquist has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool recommends Warby Parker. The Motley Fool has a disclosure policy.
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