Investors should keep their eyes on the market next week as a trendy eyewear retailer makes its public debut. Warby Parker, known for its affordable prescription glasses that have garnered an impressive following, has announced that it will be getting in on the current IPO (initial public offering) season and begin trading via a direct listing. The Warby Parker IPO is coming.
What to Know About This IPO (and WRBY Stock)
Warby Parker is set to begin trading on the New York Stock Exchange on Sept. 29 under the symbol “WRBY.” The company plans to issue 77.7 million shares of Class A common stock, worth approximately $191 million.
Prior to filing for a public listing in June 2021, the company sold 2 million shares via private shareholder transaction. The individual shares were priced at $24.53. If the coming shares are listed at the same value, which is likely, the fully diluted market value commanded by the company would be roughly $2.9 billion. If shares are listed at a higher price, which is possible, this value will increase accordingly. Some analysts expect the offer price to go as high as $27 per share.
As of its last round of funding, Warby Parker’s valuation was roughly $3 billion. Previous investors have included Menlo Ventures, General Catalyst and Tiger Global Management.
Direct Listing: Why it Matters
The Warby Parker IPO will be making its debut through a direct listing, as opposed to the traditional IPO route. Rather than have new shares underwritten, this company has opted to instead have current stakeholders “convert their shares into stock based on trading prices in private markets.” We saw this approach employed in March 2021 when video-game producer Roblox (NYSE:RBLX) made its public debut.
Some companies that opt for a direct listing may not have the resources to pay for the underwriting process. For Warby Parker, though, it is more likely that the company wanted to avoid the dilution of shares while also avoiding a lockup agreement, in which early investors are temporarily blocked from selling shares. Such provisions can lead to mass offloading at the first opportunity, which can send a stock plunging, as we’ve seen from companies like Lucid Motors (NYSE:LCID).
What’s Next for WRBY Stock
We won’t find out for another week when WRBY stock officially begins trading. However, what we do know is that this year has brought a long list of IPOs, which includes plenty of trendy digital fashion retailers such as ThredUp (NASDAQ:TDUP) and Poshmark (NASDAQ:POSH), both of whom have enjoyed profitable trading of late. The timing seems ideal for the Warby Parker IPO.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.