Another day, another direct listing. The once-exotic method of going public is increasingly popular with venture-backed companies as they look to list without running headfirst into the IPO pricing issues that have bedeviled a number of high-profile public offerings in the last year.
Precisely who is underpricing whom in those situations is a fun, if slightly academic, question.
Today’s direct listing was Warby Parker, a heavily venture-backed DTC company in the eyewear space. Warby has long had a strong e-commerce component, though it has a growing retail footprint to support its digital sales efforts.
Warby’s direct listing has proved a success. The company not only listed, but did so at a price point that was above its final private-market valuation, and its shares appreciated rapidly during its first day of trading. For the DTC market, the results partially combat the odor that 2020’s ill-fated Casper IPO left lingering around the startup business model category.
Before we close the books on direct-listing week, a few quick thoughts on the Warby listing. I found a few healthy things in the debut, and one that’s ever so slightly less sanative. Let’s have some fun!
Good news for DTC startups
In the wake of Casper’s underpowered and rapidly descending public offering, DTC startups got a bit of a bad rap. Rising channel advertising costs biting more deeply into customer acquisition costs while software revenue multiples scaled to new heights thanks to the pandemic and an accelerating digital transformation made the model of actually making physical goods and selling them to consumers seem a bit old hat.