Warby Parker’s stock debut may be a bit different from the norm, yet the expert advice still applies: Invest with caution.

The popular eyewear maker began trading publicly on Wednesday through what’s called a direct listing. That is, a large portion of the company’s existing private shares are now available for trading as opposed to new shares being created through a traditional initial public offering, or IPO.

Regardless of how a company’s stock hits the market or how it performs right out of the gate, it’s important for investors to remember that not all new listings end up being winners down the road. 

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“There’s very little predictability about long-term returns based on the first day,” said IPO expert Jay Ritter, a finance professor at the University of Florida.

The IPO market — which broadly includes direct listings — has been on a tear in 2021. Most new listings have come via a traditional IPO, which involves investment bankers underwriting the deal and lining up investors before the new shares trade publicly — a process that typically excludes average investors, who must wait until the stock is available through an exchange.

So far this year, there have been 309 new listings, eclipsing the 221 new listings in 2020, according to Renaissance Capital. This year marks the busiest one for IPOs since 2014, when there were 275.

Warby Parker, which is trading on the New York Stock Exchange under the ticker symbol WBRY, is joining a short list of other companies — including Spotify and Coinbase — that have chosen the direct-listing route instead of a traditional IPO. 

“While the number of direct listings has been small to date, on average they’ve done well,” Ritter said. “But it’s a small sample size so I wouldn’t put too much weight on that as far as past performance predicting future performance.”

Also, whether it’s Warby Parker or another new company that you’re interested in, it’s important to do your due diligence.

That includes checking out the company’s S-1 filing with the Securities and Exchange Commission to scrutinize the balance sheet and find out the potential risks of investing in the stock. SEC Form S-1 is the initial registration form for new securities required by the agency for public companies based in the U.S.

Warby Parker is a four-time CNBC Disruptor 50 company.

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