The New York based online mattress retailer, Casper Sleep (NYSE: CSPR), stock surged in its first day on the New York Stock Exchange on Thursday, closing up more than $12 from its initial pricing.
Casper Sleep opened on Thursday at $14.50 with the stock having a record high of $15.85 per share. The stock in the end gave up its gains, settling at $13.50.
Following its IPO after market close on Wednesday, Casper shares were priced at $12 per share, which was at the very low end of the stocks target range. The company had downgraded its first range of $17 to $19 to $12 to $13 per share.
The retailer is currently valued at about $575 million based on its share price. Casper plans to use the proceeds from its IPO for working capital, funding growth, and other general corporate purposes.
Another Unicorn
Casper Sleep launch in 2014 and is one of the pioneers of the "mattress in a box" trend, marketing that their mattresses as fitting in a box the size of a mini-fridge.
The company has since then expanded into 60 brick and mortar stores, with plans of opening upwards of 200 more. Its mattress is also sold in retail giants like Costco (NASDAQ: COST) and Amazon (NASDAQ: AMZN). The company has also benefited from having Target (NYSE: TGT) as an earlier investor.
Casper's latest round of funding valued the company at $1.1 billion. But in the first nine months of 2019, the company has been found to be hemorrhaging cash. Casper has reported a net loss of $67.3 million from a revenue of $312 million, spending $114 million on marketing in its last fiscal quarter.
The Sleep Economy
Casper has faced scrutiny as being unprofitable and its business model being difficult to attract new costumers and maintain old ones. At the end of the day, Casper is a mattress company, and mattress's are products that consumers do not regularly buy.
The company also faces a large scope of competition, ranging from private, public, high-end, low-end, new, and legacy companies. Rivals include Purple, Nectar, Leesa, Walmart's (NYSE: WMT) Allswell, and dozens more, even including Amazon.
Casper has expanded its retail to include bedroom furniture, pillows, sheets and blankets, calling all of these items the "sleep economy." But even with the diversity of products, investors are still uncertain rather unicorn companies like Uber (NYSE: UBER), Lyft (NASDAQ: LYFT) and now Casper will ever be profitable in the long-term.
"Getting out to public investors has gone great," CEO and co-founder Philip Krim stated in an interview. "I've enjoyed telling people what we're trying to build and helping people understand it at a level of depth that the headlines might mislead."
Despite the lower valuations, unprofitability, and high competition, Krim has set his hopes high for Casper's future. The company's criticisms do not "change what we're focuses on at Casper, which is building the world's first sleep brand."