What are you looking for?

Smart glasses: A growth story for EssilorLuxottica, or a Trojan horse for margins?

Growth story? Or a Trojan horse for margins?

Healthcare 7 Oct 2026 Vittoria Magrini

Over the years, eyewear giant EssilorLuxottica has shifted its focus from traditional optical market consolidation and lens innovation towards a new paradigm in wearable consumer technology and smart glasses. Meta Platforms and EssilorLuxottica partnered in 2019 and launched Ray-Ban smart glasses in 2021, aiming to replace smartphones by letting wearers take photos and videos with miniature frame-embedded cameras. 

Demand has been growing. After selling seven million AI glasses in 2025, up from two million sold in 2023 and 2024 combined, Meta and EssilorLuxottica considered doubling the production capacity of smart glasses from 10 to 20 million units annually by the end of 2026. However, according to Third Bridge experts, while market expansion and user adoption have validated the category, they have also introduced notable commercial and operational challenges. 

All eyes on smart glasses: Key investor’s areas of interest 

After initial commercial success, investors’ attention is now centered on three aspects, which together question the long-term potential of smart glasses contributing to a c.45% decline in EssilorLuxottica’s share price YTD.  

Firstly, disappointing sequential growth in the first two quarters of 2026. EssilorLuxottica management does not provide specific figures; however, earnings call commentary coupled with analysts’ back-of-the-envelope maths suggest lower smart glasses sales in Q2 2026 versus Q1 2026. While it’s too early to call a structural trend based on these two datapoints, this has nevertheless put some investors on edge. 

Secondly, there are growing concerns around the margin dilutive nature of the category. Third Bridge experts indicate that unlike EssilorLuxottica’s legacy analogue frames and lenses, which command industry-leading gross margins, smart glasses hardware carries an inherently lower margin profile more aligned with consumer electronics. EssilorLuxottica’s adjusted gross margin fell by 2.6 percentage points in 2025, down to 60.9%, with management attributing roughly two-thirds of this decline directly to AI glasses as manufacturing expansion costs and high-priced electronic components have not yet been fully offset by production volumes. 

Thirdly, the category is facing increased scrutiny over privacy concerns in Europe, with the European Data Protection Board currently drafting a report on smart glasses’ privacy implications. Indeed, Meta has recently announced camera-free, audio-only smart glasses due to launch later in the year. However, Third Bridge experts view these video and photo-related concerns as largely manageable due to mandatory hardware notifications (e.g., non-occludable LED capture lights), coupled with wider normalization driven by ubiquitous smartphones.  

Prescription-based smart glasses: A turning point? 

In March 2026, EssilorLuxottica and Meta expanded their portfolio with Ray-Ban Meta Optics, which are designed as optical-first frames for prescription wearers. Third Bridge experts highlight that while prescription buyers currently account for a small fraction of smart glasses sales, with entry-level non-prescription models representing approximately 80% of total smart glasses volume, they could serve as the largest addressable market given that 45–50% of the global population requires vision correction. Moreover, the Ray-Ban Meta Optics carry a 33-90% plus price premium over Ray-Ban Stories Gen1 and 2 devices depending on the choice of lenses. Given the substantially higher average selling prices and implied gross margins, Third Bridge experts note that shifting the prescription mix toward 30-40% by year-end 2027 represents the clearest near-term pathway to margin accretion.    

Beyond the mix-shift to prescription devices, some experts have identified additional potential means to improve category margins for EssilorLuxottica. One former executive we spoke to believes the company can capture high-margin recurring subscription fees by offering premium AI features. Other Third Bridge experts, however, are not so optimistic, noting that Meta controls data and software revenues, implying EssilorLuxottica would need to re-negotiate partnership terms, something which could be contentious. 

Lower Average Selling Price (ASP) smart glasses: volume growth, but at what cost?  

Earlier this year, in collaboration with EssilorLuxottica, Meta announced the launch of Meta Glasses, a more accessible collection of smart glasses priced at a lower entry point, USD 299. At face value, the introduction of a lower-priced model could seem counterproductive to EssilorLuxottica’s need to expand margins. Third Bridge experts say this reflects divergent pricing priorities between EssilorLuxottica and Meta. On the one hand, EssilorLuxottica seeks to maintain a price gap between traditional analogue frames and smart glasses to protect its core high-margin business from cannibalisation. On the other hand, Meta is prioritising the expansion of the smart glasses category and maximizing demand across its platform. Although higher-priced smart glasses models will contribute to lift the ASP, this could be slowed by the launch of more affordable Meta Glasses. Ultimately, Third Bridge experts suggest that the launch of lower ASP models should drive platform stickiness ahead of incoming competition from rivals such as Google, Samsung, and Warby Parker.

Competition on the horizon 

Concerns around the evolving competitive landscape in smart glasses are intensifying for EssilorLuxottica and Meta. Beyond Google, Samsung, and Warby Parker, China-based OEMs such as Xiaomi, Baidu, and Rokid have entered the picture. However, Third Bridge experts highlighted that EssilorLuxottica has a key, sustainable, competitive moat to defend: its retail network of 15,000-18,000 brick-and-mortar stores and wholesalers. Currently, between 60% and 70% of smart glasses are still purchased in physical stores and such presence seems to be crucial for delivering both physical try-ons and clinical eye care, which EssilorLuxottica’s competitors lack. 

Conclusion: Where is the EssilorLuxottica-Meta partnership heading long-term?

While the demand outlook and smart glasses category economics remain uncertain for EssilorLuxottica, our experts believe the introduction of prescription-based solutions represents a credible near-term margin-uplift opportunity for EssilorLuxottica. Execution will also be key. EssilorLuxottica’s distribution network, first-mover advantage and access to Meta’s AI platform should serve as a sustainable competitive moat to defend. 

As the story continues to develop, Third Bridge will seek to cover the medium- to long-term outlook of the Meta-EssilorLuxottica collaboration, and how the adoption of prescription-based smart glasses is going to evolve.  

All insights in this article are based on information provided by Third Bridge experts. For media enquiries, please contact: comms@thirdbridge.com

Relevant transcripts: 


References: 
Have a question?

Get in touch to find out more about how Third Bridge can help you.

Contact us