PHILADELPHIA--(BUSINESS WIRE)--Predictive customer analytics company Theta today released its updated analysis and Customer-Based Corporate Valuation® (CBCV) of U.S.-based online eyewear retailer Warby Parker (WRBY) ahead of the company’s upcoming Q2 earnings results.
Theta had previously applied its proprietary CBCV methodology in advance of Warby Parker’s direct listing in late September 2021, controversially calling into question the company’s market valuation at the time. This initial analysis leveraged robust customer and financial data disclosed in Warby Parker’s SEC filings, driving an estimated fair valuation of $22 per share, well below the company’s then-current valuation of $54.05. Theta’s predictions have proven highly accurate - for example, Warby Parker’s net revenues were predicted in Q1 2022 to be about $157 million, which was just 2% off from the $153 million the company actually reported.
While Theta has revised the fair valuation estimate slightly downwards, the new valuation is $2.4 billion ($21 per share), 5% less than what was previously estimated. Even using more conservative assumptions about Warby Parker’s cost structure, Theta still infers a fair valuation north of $16. With WRBY’s stock trading at $11 a share at the time of the report, the company’s stock price has upside potential.
“Our updated analysis of Warby Parker shows that our prior revenue predictions were highly accurate and that our caution over the company’s market valuation was well-founded. This new analysis suggests that the company’s unit economic health is consistent with what we had inferred when we last analyzed them,” said Dan McCarthy, co-founder of Theta and Assistant Professor of Marketing at Emory University’s Goizueta Business School. “This is a testament to the robust nature of our probability models and the strength of Warby Parker’s customer base.”
By using its unique, and highly accurate CBCV model, the Theta data science team generates revenue forecasts using probability models based on customer behavior. They then apply future margin and capex assumptions to translate revenues into free cash flows and, ultimately, a fair valuation estimate.
To tighten its updated analysis, Theta partnered with Cowen Research on additional financial assumptions.
“While the markets may be fluid, and macroeconomic conditions weakening, the stability of Warby Parker’s unit economics thus far, coupled with an 80% lower valuation, makes us cautiously optimistic about its stock price,” said McCarthy.
Disclaimer: The statements in this press release are based solely on current and publicly available data and are intended for informational and educational purposes only. Parties should not construe any such information or other material as investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Theta to buy or sell any securities or other financial instruments.
Theta is a predictive customer value analytics company that leverages the Customer-Based Corporate Valuation® (CBCV) and Customer Lifetime Value (CLV) frameworks to provide unrivaled and actionable insights into customer behaviors as well as overall company health and how it can be enhanced. The company was founded by professors Peter Fader and Dan McCarthy, the masterminds behind these industry-leading customer value models and methodologies, following the successful exit from their first consumer analytics firm, Zodiac, which they sold to Nike in 2018.