Further weakness as Warby Parker (NYSE:WRBY) drops 5.4% this week, taking one-year losses to 58%

Warby Parker Inc. (NYSE:WRBY) shareholders should be happy to see the share price up 18% in the last month. But that doesn't change the fact that the returns over the last year have been disappointing. During that time the share price has sank like a stone, descending 58%. It's not that amazing to see a bounce after a drop like that. It may be that the fall was an overreaction.

With the stock having lost 5.4% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Warby Parker

Warby Parker wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last twelve months, Warby Parker increased its revenue by 12%. While that may seem decent it isn't great considering the company is still making a loss. It's likely this muted growth has contributed to the share price decline of 58% in the last year. We'd want to see evidence that future revenue growth will be stronger before getting too interested. When a stock falls hard like this, it can signal an over-reaction. Our preference is to wait for a fundamental improvements before buying, but now could be a good time for some research.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Warby Parker is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Warby Parker will earn in the future (free analyst consensus estimates)

A Different Perspective

Warby Parker shareholders are down 58% for the year, even worse than the market loss of 12%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. Putting aside the last twelve months, it's good to see the share price has rebounded by 6.2%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. It's always interesting to track share price performance over the longer term. But to understand Warby Parker better, we need to consider many other factors. For example, we've discovered 1 warning sign for Warby Parker that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.