Spectacle brand Warby Parker is valued at more than $ 6 billion after completing a direct listing in New York on Wednesday, more than double its value during a recent private fundraising round.
Through a direct listing, investors can start trading shares on a stock exchange without the company raising money itself. Warby Parker is the first consumer goods business and the first public benefit corporation — meaning it has a legal requirement to balance the interests of shareholders and other stakeholders — to pursue such a listing in the US.
The company’s shares opened at $ 54.05 on the New York Stock Exchange on Wednesday afternoon, compared to the $ 24.53 price paid in a fundraising round in August last year and in a tender offering as recently as April.
The strong start emphasizes the continued invester’s appetite for fast-growing businesses despite recent rides in the broader stock market. More than 300 companies listed in the U.S. this year, including specialty sourcing companies – more than twice as many as in the first three quarters of 2020.
Neil Blumenthal, co-CEO of Warby Parker, said the disclosure provides’ exposure ‘to attract more customers and staff, but adds:’ We feel very good about our balance and did not think it made sense to unnecessary to tackle. dilution ”of a traditional stock exchange.
He said a direct listing is a more transparent, inclusive and fair process that enables us to engage with a broader group of investors. . . without unnecessary intermediaries ”.
The 11-year-old business in New York started selling glasses directly to consumers online, but now has a network of more than 100 physical stores and plans to add more. Managers are also hoping to build new businesses in contact lenses and eye exams.
Warby Parker, named after two characters in a Jack Kerouac journal reported a net loss of $ 56 million in 2020 on revenue of $ 394 million.
Live streaming has slowly gained steam as an alternative to traditional IPOs since the music streaming service Spotify first ran in the US in 2018. the score for 2021 to six, as many as listed in the previous three years.
It is cheaper for companies to be known through direct listing, and supporters such as Bill Gurley of venture capital firm Benchmark have said they offer a more efficient method of determining the appropriate initial share price.
However, bankers and other experts emphasize that they are only suitable for a small number of businesses that have raised a lot of capital and have a high profile to interest investors.
As a result, they are dominated by capital-backed technology companies. Warby Parker has previously raised more than $ 500 million from investors, including Tiger Global, T Rowe Price and General catalyst.
‘There will be room for direct offers [in future], but it is not going to take over the IPO market, ”said Reena Aggarwal, a professor at Georgetown University and an expert on public listings.
She said the lack of a traditional bank-led sales process in direct listings could make them particularly vulnerable in a downturn in the market.
‘If there is a fix – and at some point it will happen – then you need more effort to make a [listing] than you need today, ”said Aggarwal. “Today, a lot of money is rushed to transactions.”