Shares of online eyewear retailer Warby Parker (WRBY 1.65%) are soaring in the wake of the company's second-quarter earnings report. The stock jumped as much as 30% this morning, settling down to a 20% gain as of 2 p.m. ET.
Warby Parker's adjusted bottom line showed a net loss of $0.01 per diluted share on revenue of $149.6 million. These results were roughly in line with Wall Street's expectations.
Looking ahead, Warby Parker slashed its full-year revenue guidance from $655 million to $590 million. Management cited a challenging economic environment and a desire to position the company for "sustainable growth" and more robust profitability.
In-line results and 10% lower full-year sales guidance normally adds up to a brutal day for the reporting company's stock, but Warby Parker soared instead. Investors appear to be excited by management's comments, not hard financial data points.
On the earnings call, CEO Dave Gilboa highlighted Warby Parker's strong customer loyalty, with nearly 100% of clients coming back for another order within four years after their first purchase. The company is also finding that physical retail stores can be useful companions to its try-at-home e-commerce model, so it plans to add another 40 locations to its existing network of roughly 150 stores.
Even if the reported results didn't hold any surprises and the immediate future looks challenging, investors were inspired by Warby Parker's long-term growth plans. Despite the sudden surge in share prices, the stock trades 70% lower on a year-to-date basis and nearly 30% of its shares are still sold short. We are looking at a volatile small-cap stock here, and it remains to be seen how well its unusual sales model holds up in the long run. I don't mind watching Warby Parker from the sidelines until further notice.