Warby Parker stock climbed as high as $26.95 today, their strongest level since August 24. The stock has rallied more than 15% from its low earlier this week, lifting its market capitalization to $2.89 billion. Even so, WRBY remains one of the most heavily shorted consumer stocks, which suggests many investors still expect the shares to retreat.
Concerns about Warby Parker’s growth and valuation remain
Warby Parker stock has remained under pressure in the past few months, moving from a high of $30.9 in June to the current $26.
This retreat is likely because investors are concerned about its revenue growth, margins, and valuation.
The most recent results showed that the company’s revenue jumped by 10% in the second quarter to $236 million in the second quarter. This revenue was higher than what analysts were expecting, and was driven by a rise in average revenue per customer (ARPU) and active customers. It also benefited from its ongoing store openings that have driven its counts to 352.
Still, despite this revenue growth, it is worth noting that EssilorLuxottica, which has been around for decades, recorded a revenue growth of 8.7%.
The management also boosted its estimates for the third quarter and the full year. It now expects that its annual revenue will be between $959 million and $976 million this year. At the upper side, the company will have recorded an annual revenue growth of 12%.
The company aims to benefit from its intelligence eyewear launch, which is done in a collaboration with Google Gemini. It will have features like a voice-activated assistance, real-time translation, and cameras.
Analysts believe that its annual revenue will jump to $1.14 billion next year, up by 17% from the expected 2026 figure. This growth will likely be driven by its intelligent eyewear division.
A key concern among investors is that it is relatively overvalued. It has a trailing twelve month (TTM) price-to-earnings ratio of 57 and a forward multiple of 55.66. This figure is higher than the S&P 500 Index average of 19.1. It is also much higher than EssilorLuxottica’s 27.
Analysts tracking the company have a modest outlook for the company. The average estimate among analysts is $26.6, slightly lower than where it is today. UBS has a target of $28, while Citizens, Bank of America, BTIG, and Citigroup see it rising to $29, $33, $34, and $24, respectively.
Warby Parker stock price technical analysis
The daily chart shows that the WRBY stock bottomed at $22.47 this week. This price was slightly above the Strong, Pivot, Reverse level of the Murrey Math Lines tool.
It formed a small double-bottom pattern, a common bearish reversal sign in technical analysis. It is also moving slightly above the 50-day Exponential Moving Average (EMA).
At the same time, it is attempting to move above the lower side of the ascending channel. Therefore, the most likely forecast is moderately bullish, with the next key target to watch being at the Strong pivot reverse level of $28.13. A drop below the support of $25 will invalidate the bullish outlook.