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Casper Drops IPO Price After Lack Of Demand

DATE POSTED:February 6, 2020

Casper Sleep priced its initial public offering (IPO) at $12, a low rate for its already slashed range, reports said.

The company has had a tough time on its road to rolling out an IPO, a sign that unprofitable startups will have problems with going public. Casper recently said it was estimating a $17 to $19 price range for stocks. However, on Wednesday (Feb. 5), it lowered that estimate to around $12 or $13.

That price will value the mattress seller at $475 million, excluding underwriters’ allotment. The number is well below the $1.1 billion it was valued at in private last year.

The company will likely begin trading on Thursday (Feb. 6).

Casper — known for selling mattresses and other sleep-related items online, and delivering them through the mail — was the first startup expected to go public this year. The company is considered a pioneer in the “bed in a box” trend, though it has shown a tendency toward burning through funds, usually on marketing, and has a business model vulnerable to competition.

However, despite its strong anticipations last year, including investors like Target and other entities, the market has not been friendly to Casper as of late — or other companies that weren’t profitable. The disappointment stems from a series of under-performing startups in 2019, including the failure of WeWork and Endeavor Group Holdings to go public, and meager stock performances from companies like Uber, Lyft and SmileDirectClub.

The IPO market isn’t expected to see many new names go public this year — though Airbnb is likely to do so through a direct listing that wouldn’t net the company money, even though it would trade publicly.

Casper saw revenues of $312.3 million for the first nine months of 2019, along with a loss of $67.4 million. The revenues increased 20 percent from a year earlier, while losses widened by under 5 percent.

After hitting more than $1 billion in value, the company began to seek more money from investors, according to those familiar with the matter. When that didn’t work, it began to look toward the public markets for necessary funding.