CNBC’s Jim Cramer on Tuesday suggested buyers to watch out about shopping for shares of Warby Parker forward of the eyeglass retailer’s scheduled direct itemizing Wednesday.
“In a tough market where investors are starting to sour on new issues, I think you should steer clear of Warby Parker unless it falls below that [$40] reference price and you can get it in the $30s,” the “Mad Money” host stated. “Otherwise I recommend … waiting for a pullback to a lower level.”
Cramer stated he is a fan of Warby Parker as an organization, suggesting it has “a great business model” of reducing out the intermediary by making and promoting its personal glasses. While Warby Parker’s preliminary focus was on e-commerce, the corporate has additionally been increasing its brick-and-mortar footprint, Cramer stated, serving to it enchantment to shoppers who would favor to store for frames in individual.
“So far, the company’s doing pretty well. In the first six months of the year, Warby Parker had 53% revenue growth, 60% gross margin. They’re very close to turning a profit,” Cramer stated, including the corporate can be projecting 25% income development for subsequent 12 months.
“Putting it all together, Warber Parker’s got solid financials, but there’s nothing spectacular about the numbers — good story, not a great story,” Cramer stated.
Cramer additionally stated he has some “real worries” concerning the firm, together with its projected valuation and whether or not there is a restrict to how many individuals actually need to purchase glasses on-line. “If Warby Parker’s less of an e-commerce disruptor and more of a low-cost glasses chain, I don’t know. Call me unexcited,” Cramer stated.
“Their market share’s still at less than 2%,” added Cramer. “While management presents this as an opportunity because it means they have lots of room to grow, you’ve got to wonder if they’ll be able to pull that off.”
Investors additionally want to watch out about shopping for Warby Parker straight away due to the broader market situations, Cramer stated. All three main U.S. fairness indexes are solidly decrease within the month of September.
“With Warby Parker, the biggest problem is timing. This is a market that’s getting really tired of new public issues,” Cramer stated. “Today it savagely turned against all things growth — that’s not the best environment for an up-and-coming glasses retailer to make its debut.”