Brand deals with Eddie Bauer, Reebok, Nautica, and developing the first mobile voice interface for Chat GPT fuel growth in a multi-billion dollar eyewear sector
Florida-based Innovative Eyewear (NASDAQ: LUCY) is a perfect example of a company turning ambition into progression and has, since its founding in 2019, been an instrumental player in the fast-growing, tech-forward smart eyewear market. In fact, combining its acquired 11 trademarks and applications for its Lucyd brand with global, multi-year licenses to create and market its innovative smart eyewear and accessories for Nautica, Eddie Bauer, and Reebok, the company's commitment to having its products measured as the global standard in smart eyewear is very much a mission in progress.
And the better news for LUCY, and potentially its investors, is that the milestones reached toward earning that status are accruing. That's by design, not coincidence. Since its founding, LUCY has focused on a single ambitious objective—to evolve what the world thinks a pair of glasses can be. That took courage, especially in an eyewear sector that has seen few innovations since its inception in Murano, Italy, roughly 700 years ago. And the ones made generally relate to materials used in manufacturing, not the functionality.
Fast-forward to 2023, LUCY is changing or, perhaps better said, is disrupting the sector landscape, with its app-fueled Lucyd brand lineup providing a perfect pairing of stylish, prescription-ready glasses and sunglasses with a hi-fi Bluetooth headset integrated seamlessly in the temples. And we're not talking about just speakers, while that integration in and of itself is a massive technological accomplishment.
A Technological And Functional Win
Lucyd brand smart-frame technology is that on steroids. More than speakers, its Bluetooth-equipped frames are Chat GPT enabled, water resistant, and offer full optical benefits. That's not all. Their state-of-the-art connectivity capabilities allow users to access widely used apps, including rideshare, navigation, payment, email and messenger, and even stock trading. That's not even close to an exhaustive list. Virtually any of the estimated 8.9 million apps that meet current iOS and Android performance standards can be accessed.
That puts LUCY in a sweet spot of opportunity, especially with the expectation for smart eyewear to dovetail with the traditional eyewear market in the next 5 years. There's even speculation that smart eyewear sales will be competitive with traditional ones by the end of this decade. An excellent analogy, even a case study, is the smartwatch market.
While many people have been introduced to those over the past ten years, they've actually been around since the 1990s, primarily able to do simple things like calculations. However, once they got to a form factor and level of functionality that far surpassed traditional wristwatches, like the Apple Watch (NASDAQ: AAPL), consumers were provided a genuine choice – do they want a piece of jewelry or a very capable and dependable digital support device that tracks heart rate, exercise, allows calls, shows notifications, and provides entertainment without the need to pull out their phone.
That decision became apparent around 2020, when, taking into account seasonality, smartwatches began to outsell traditional watches worldwide. That trend hasn't slowed, which, comparably speaking, can be excellent news for leaders in the smart eyewear space, LUCY included. In fact, with the precedent set by the smartwatch market, which saw early adoption turn to mass, the tailwind behind LUCY's operating momentum should continue to strengthen.
Earning A Bullish Price Target From Maxim
An analyst from Maxim Group thinks so. He initiated coverage of LUCY stock with a BUY rating and price target of $1.75, roughly 326% higher than its current level. Plenty supports bullish speculation, including its low O/S count of approximately 12.92 million and float of 7.72 million. And with insiders holding over 40% of the company's stock, their interests should stay closely aligned with its shareholders.
Of course, revenues matter. After completing a successful secondary offering to raise the capital needed to launch smart eyewear collections under its new Nautica, Eddie Bauer and Reebok partnerships, and its forthcoming Bluetooth safety eyewear, those are expected to ramp this quarter from contributions by the Nautica Powered by Lucyd line and its unique Lucyd Safety smart eyewear line. Momentum should carry into Q1 of next year with the expected launch of the Eddie Bauer and Reebok Powered by Lucyd lines. Notably, LUCY highlighted that its recent fundraising should be ample to manufacture and market all four of these new product lines and make further enhancements to the Lucyd app, which powers seamless connection to ChatGPT on all of its eyewear. In other words, near-term dilution could be off the table.
Keep this in mind when appraising the LUCY value proposition. Its latest diversification initiatives add to a busy year of accomplishment. In Q1, LUCY delivered an end-to-end upgrade to its core Lucyd Lyte product. It improved sound and call quality by adding additional speakers and microphones, increased battery life by 50%, and introduced 15 new styles capturing the latest trends in traditional eyewear. Additionally, LUCY engineered significant product improvements, which debuted in its Lyte XL collection this quarter, with inclusion into all future models, including the Nautica line, starting in 2024.
Getting those into sales channels utilizes an efficient modular retailer display system already deployed in about 25 partner locations. The adaptable system includes four modular components that can expand to fill the counter space available, and the display can be easily updated with new videos and insert imagery on a seasonal basis. Accelerating the placement of these sales drivers, LUCY announced a seven-store deal with Privato Duty Free for its placement in US duty-free stores. They also engaged with a leading key account consultancy group fluent in the retail placement of eyewear and signed an agreement with a bespoke influencer marketing agency to promote its brand portfolio. That work is more than expanding its revenue-generating footprint; it's creating an expansion blueprint that could shift Lucy's earning retail presence space from hyper to warp.
Gaining Momentum And Distancing From Competition
That's happening. It's also distancing LUCY from competitors, so when traction increases from the groundwork laid in 2023, the trajectory of both measures should steepen. Few can argue against that premise or the value inherent to Innovative Eyewear's innovative coupling of design, performance, and function that takes the most important user wearable to a new level and offers it at a price comparable to traditional designer frames and lenses.
In fact, its Lyte 2.0 line, which offers best-in-class battery life and designer styling for smart eyewear, sells at roughly $200. For that, a consumer gets all the benefits noted. Most recently, app-enabled, seamless interaction with ChatGPT, the first mobile voice interface for that platform. The company has also developed a full-stack social audio app called Vyrb™ and an AR virtual try-on app for retail partners. All are value drivers.
As such, expect LUCY to benefit. By leveraging its 63 patents and pending applications and over 55 custom styles to target sales from an estimated $33.8 billion eyewear market, that's more than likely, it's probable. And by targeting sales from a transitioning US eyewear market estimated at $33.8 billion, LUCY's established and strengthening market position and brand partnerships with three global business powerhouses could help them earn a sizable share of that opportunity. Companies that innovate and disrupt people's lives for the better typically do.
Innovative Eyewear (LUCY) checks all those boxes. And on a sum of LUCY's parts basis, it could lead them to score that $1.75 price target set by Maxim Group faster than many think. That's not an overzealous presumption, either. Being well-capitalized, marketing cutting-edge fashion and technology, and exploiting opportunities to quickly expand a retail footprint are all ingredients that add value. LUCY checks those boxes. As important, they combine to check one more- intrinsic value and inherent potential are more than near-term value drivers for LUCY; for investors, they support a strong case that the likeliest path of least resistance for LUCY shares is, in a word, higher.
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