Warby Parker soared in its market debut, setting a high bar for

Warby Parker‘s debut Wednesday set a good precedent for a number of online-first retailers preparing to go public.

Warby shares skyrocketed 36% Wednesday. Founded in 2010, the company started hawking its eyewear online and has avoided using wholesale partners to make a sale. Its direct listing on the NYSE has put a spotlight on a class of direct-to-consumer brands that could be heading to Wall Street, next.

Allbirds, Fabletics and Rent the Runway are among those who quickly come to mind. Other peers — including the makeup brand Glossier, luggage start-up Away, athletic apparel brand Nobull and the sustainable shoe maker Rothy’s — might not yet be eyeing the public markets, but they’ve long followed Warby’s so-called direct-to-consumer playbook.

Even with the strong performance, some experts say Warby’s stock is overvalued, at a more than $6 billion market cap, and investors should proceed cautiously. While Warby has a growth story to sell, it remains unprofitable, and still has a lot to prove to live up to its current valuation, according to analysts. How shares trade in the coming weeks will likely be far more telling of Wall Street’s longer-term acceptance of Warby’s direct-to-consumer business model.

“The market’s perception of Warby is very, very generous,” said Dan McCarthy, an assistant professor of marketing at Emory University, who follows brands like Peloton, Revolve and Casper that began by selling products online directly to consumers. “People are willing to give the company the benefit of the doubt.”

“The fact that they get so much value from customers so far into the future can at least allow them to plausibly talk about scenarios where — a long time in the future — they will be significantly more profitable than today,” he said.

McCarthy said a fair valuation for Warby would be closer to $2.5 billion. That’s well below where shares were changing hands on Thursday, at about $53 apiece. It’s even lower than the reference price of $40 Warby received the night before its direct listing, which equates to a $4.5 billion valuation.

“This is a very strong signal that companies looking to go public have a receptive market to sell into, if they were to,” McCarthy said.

However, companies like Warby have shown mixed performance this year. According to investment bank Renaissance Capital, 12 internet retailers including Warby have gone public so far this year, compared with 9 in 2020. Shares of the scrubs-maker Figs, for example, are up about 31% since listing. But Jessica Alba’s Honest Company has seen its stock drop more than 43%.

Warby shares pulled back a bit on Thursday, closing down about 2.6%.

Most direct listings will see the company’s stock fall below the initial listing price within the first 90 days of trading, according to Kathleen Smith, a co-founding principal at Renaissance Capital.

“They certainly deserve the…