Warby Parker (WRBY): Demographic Trends Point to a Bullish Case

• Warby Parker calls saw unusual options activity, implying a possible near-term upside movement in WRBY stock.
• However, the longer-term picture could also be quite enticing based on demographic trends involving baby boomers and the youngest generations.
• As well, the economic backdrop might cynically favor WRBY as consumers focus their spending on the necessities rather than the luxuries.

When the champagne bottles started bursting to ring in the new year, 2021 would hit the record books for the biggest period for initial public offerings (IPOs). From traditional debuts to direct listings to reverse mergers with special purpose acquisition companies (SPACs), seemingly everyone wanted a piece of the pie. Among the participants was Warby Parker (WRBY), a retail specialist in discount prescription glasses, contact lenses, and sunglasses.

After early initial excitement, the bottom was pulled underneath WRBY stock in November. With the exception of a few brief respites – or more pejoratively bull traps – Warby Parker went on to print some sickening losses of market value. Following the close of the June 27 session, the eyewear center found itself down 72% on a year-to-date basis. Since its first public close, the security has dropped nearly 77%.

Ordinarily, rational investors avoid piling into such devasted equities under the thesis that attempting to catch a falling knife could leave you with lacerations. However, WRBY was the one of the subjects of unusual options activity which Barchart.com picked up. Traders acquired $15 calls with an expiration date of July 15, 2022. Volume reached 4,035 contracts against an open interest reading of 146.

When the transaction was made (June 27), WRBY stock closed at $12.72; therefore, the $15 calls are out of the money. By logical deduction, some market participants anticipate Warby Parker shares to swing higher in the near term. While such a move is possible, the narrative also supports long-term investments.

Demographic Realities Boost WRBY Stock

One of the basic realities of life is that as we age, things don’t work as well as they did in our youth. Gradually, changes in our vision represent a conspicuous challenge in our latter years. Specifically, presbyopia or the loss of ability to see close objects or small print may require patients to use reading glasses to perform up-close tasks. Naturally, this dynamic cynically helps WRBY stock.

Moreover, the underlying company can potentially expect wave after wave of new clients. According to the Pew Research Center, it was just the summer of 2019 when millennials overtook baby boomers as the largest living generation in the U.S. But this backdrop also implies that there are millions of boomers who may suffer from or develop eye conditions like presbyopia, bolstering the bullish case for Warby Parker.

Another factor that could help lift WRBY stock occurs in the other end of the demographic spectrum. Increasingly, health experts have sounded the alarm about the rise in myopia. While casual effects represent a source of heated debates, one hypothesis is that the increased prevalence of digital devices in children’s lives may be exacerbating the problem.

Again, it’s a cynical concept but with enough time, more demand could filter down to Warby Parker.

Economic Realities Also Help Warby Parker

The other component for WRBY stock that is perhaps even more cynical is the economic environment. Currently, the skyrocketing inflation rate directly diminishes the purchasing power of the dollar. Therefore, many households are increasingly forced to eschew discretionary purchases for the absolute necessities.

Seeing as how proper vision is arguably our most important sense, WRBY stock may enjoy some economic insulation. Circumstances truly must go sour for people to compromise core healthcare needs.

Looking well into the future, myopia is an all-encompassing global dilemma. Citing research from the International Agency for the Prevention of Blindness (IABP), the University of Utah reports that the condition is projected to affect 50% of the world’s population. Further, it states that “increased ‘near work’ or a closer working distance, such as where we hold our phones, tablets, or computers, can increase myopia progression.”

So, whether Warby Parker intends to expand its footprint aggressively or to stay put with its current reach, global myopia trends are essentially bringing demand to the company. As a speculative venture, WRBY stock enjoys significant fundamental catalysts.

Stay Focused

Now, it’s fair to point out that the unusual options activity for WRBY call options represent a near-term wager. Therefore, it’s difficult to say whether this specific order will pan out well or not. In addition, prospective participants should realize that there’s a reason why WRBY has performed so poorly – namely, the widening net losses.

However, for those seeking a discounted market opportunity, Warby Parker might make sense as speculation. Certainly, you don’t want to put in any more money than you can afford to lose. Nevertheless, the 72% YTD loss might be a tad bit too steep.

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