Warby Parker stock price surged by over 15% on Tuesday after unveiling a major $150 million partnership with Google. It jumped to a high of $22, its highest swing since March 6, up by 61% from the lowest point this year. So, will this partnership fuel WRBY’s stock surge in the coming months?
Warby Parker partnership with Google
The main catalyst for the WRBY stock price was a partnership with Google, one of the top technology companies. This partnership will see Google invest $150 million to develop AI-powered smart glasses.
Google has already invested $75 million in this project, and is expected to release the rest soon. Most notably, Google will become a minority shareholder in Warby Parker, a company valued at over $2.47 billion.
The two companies hope to become major players in the wearable industry, which has struggled to gain traction over the years. The most notable failures was Google Glass, a product that was launched in 2012. After years of development, the product failed to gain traction and was canceled in 2015.
Other wearable products have also failed to gain traction. The most recent “failure” was Apple Vision Pro, a product costing $3,500 that failed to gain traction among users. Apple has not released its sales numbers, but its financial results have not shown any meaningful improvement since its launch.
This partnership will also be challenging because Warby Parker is a glass maker and has no experience building these smart glasses. Therefore, there is a risk that the company’s AI products will not be all that successful.
Read more: Warby Parker: Is it a better stock than EssilorLuxottica?
WRBY business is doing well
Warby Parker’s business is doing well even without the Google partnership. Its success is mostly because of the affordability of its glasses, many of which sell for $95. It has not increased the price since its founding in 2010, meaning that, it is selling its products at a discount. Accounting for inflation, Warby Parker should be selling its glasses for about $140 today.
The company has solved this problem by introducing glasses that sell for $195, and its financial results show that these ones are highly popular. Comparable glasses by other companies would cost over $500.
WRBY revenues jumped from $393 million in 2020 to $771 million. It has also continued to narrow its losses and is now on a path towards profitability. Its annual loss moved from 4144 million in 2021 to $14 million in the trailing twelve months (TTM).
The most recent results showed that Warby Parker’s revenue rose by 11.9% to $224 million as the average revenue per customer jumped to $310. Its free cash flow rose to $13.2 million.
The management expects that the company’s revenue rose by between 13% and 15% to between $869 million and $886 million. Also, its adjusted EBITDA will be between $91 million and $97 million.
Warby Parker stock price analysis
The daily chart shows that the WRBY share price bottomed at $13.6 in April after Trump launched his tariffs on Liberation Day. It then rebounded and moved to a high of $22, its highest level since March 6.
The stock formed a God candle on Tuesday after the Google partnership deal. This is a common occurrence whenever a big company like Google partners with a smaller one.
Historically, these gains are usually short-lived as the momentum eases over time and the hard work of implementing the strategy rises. Therefore, the Warby Parker stock price will likely lose momentum in the coming days, and then bounce back later this year.
The recovery will be because of its organic growth and the profitability instead of the Google partnership.
Read more: Warby Parker stock price crashes to key support: buy the dip?
The post Warby Parker stock price analysis: will the WRBY surge continue? appeared first on Invezz