Casper seeks lower valuation in IPO than private funding round
Mattress company Casper has pitched a significantly lower valuation in its initial public offering than its last funding round in one of the first major tests of Wall Street’s appetite for lossmaking groups since the collapse of the WeWork IPO.
The New York-based group is offering 8.35m shares of common stock at between $17 and $19 each, according to a filing on Monday with US securities regulators. At the top end of that range, Casper would be valued at $744m — markedly lower than the $1.1bn valuation it secured in the private market last year.
The group, whose investors include actor Kevin Spacey and rapper 50 Cent, plans to raise as much as $159m in the flotation, or $182m if underwriters utilise a ‘greenshoe’ option that allows them to sell additional shares.
Casper, which ships mattresses directly to customers, forecasts 2019 revenue of $437m to $441m, or a 23 per cent increase from the previous year at the midpoint of the range. The company reported sales growth of 43 per cent in 2018.
It also projects its net loss will widen to as much as $96.4m this year, from $92.1m in the previous year, driven by investment in sales and marketing and administrative expenses to support growth in retail stores and product development.
The flotation will be one of the first tests of market appetite for companies that have struggled to show a clear path to profitability following the collapse of WeWork’s IPO last year and stumbles for other start-ups like Peloton and Smile Direct Club.
Casper hopes to capitalise on the rapid growth in what it refers to as the “sleep economy”. The company, which launched in 2014 and offers three mattress models ranging from $395 to $1,395 each, has expanded into pillows, sheets, duvets, bedroom furniture and other sleep accessories. It now operates in seven countries including the US, UK and Canada. The global sleep economy stood at $432bn last year, Casper said, citing according to data from research group Frost & Sullivan Assessment.
The company said it intends to use the proceeds of the offering “for working capital, to fund growth and for other general corporate purposes”.
Casper, which pioneered the bed-in-a-box business, faces growing competition from the likes of Purple, Leesa, and Nectar.
It plans to list under the symbol “CSPR” on the New York Stock Exchange. Morgan Stanley, Goldman Sachs and Jefferies are serving as lead underwriters for the IPO.