Another day, another direct listing. The once-exotic method of going public is increasingly popular with VC-backed companies as they seek to go public without facing head-on IPO pricing issues that have plagued a series of high-profile public offerings. in the last year.
Precisely who is underestimating whom in those situations is a fun, if slightly academic, question.
Today’s direct listing was Warby Parker, a DTC company heavily backed by companies in the eyewear industry. Warby has long had a strong e-commerce component, although it has a growing retail presence to support its digital sales efforts.
Warby’s direct listing has proven to be a success. The company not only traded, but did so at a price that was above its final private market valuation, and its shares appreciated rapidly on its first day of trading. For the DTC market, the results partially combat the odor that Casper’s unfortunate IPO of 2020 it left lingering in the startup business model category.
Before closing the books on the direct trading week, some quick thoughts on Warby’s trading. I found some healthy stuff on debut, and one that is a little less healthy. Let’s have a little fun!
Good news for DTC startups
In the wake of Casper’s rapidly descending, low-powered public offering, DTC’s startups got a bit of a bad rap. Rising channel advertising costs more deeply affected customer acquisition costs, while software revenue multiples rose to new heights thanks to the pandemic and an accelerated digital transformation made the model of manufacturing physical goods and selling them to consumers seems a bit old-fashioned.