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Casper Sleep rises in debut after IPO falls short of target

Feb 07. 2020
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By Syndication Washington Post, Bloomberg · Liana Baker 

Bed-in-a-box seller Casper Sleep Inc. rose in its trading debut after an $100 million initial public offering priced at the bottom of a reduced range.

Shares of Casper rose as much as 32% Thursday and were up 23% to $14.75 apiece at 1:22 p.m. in New York, giving the company a market value of $585 million. That's just over half of the online mattress retailer's $1.1 billion valuation in a private funding round last year.

Casper sold 8.35 million shares Wednesday for $12 each. This came after it cut its price target significantly from an initial range of $17 to $19.

"We're seeing consumers come back very frequently to buy from Casper," Chief Executive Officer Phillip Krim said in a Bloomberg TV interview. "That will continue to accelerate as we bring more products to market."

The IPO shows investors have grown skeptical of money-losing unicorns -- startups whose private valuations reached $1 billion or more. The listing follows landmark but largely disappointing performances last year by consumer-oriented companies including Uber Technologies Inc. and its smaller rival Lyft Inc., as well as SmileDirectClub Inc. and Peloton Interactive Inc.

Casper priced its shares on the same day as PPD Inc., a biotechnology and drug-research services firm that raised $1.62 billion, pricing its shares at the top of its target for the offering. In the past year, such business-to-business firms, especially software makers, have tended to fare better in their IPOs than consumer-focused companies.

New York-based Casper, founded in 2014, became one of the leading brands in its niche thanks to its pioneering status and savvy marketing. Since then, a slew of competitors have emerged in the U.S. and abroad. From 2016 to September 2019, Casper spent $422.8 million on marketing, according to an earlier filing.

Casper had 60 stores in the U.S. and Canada as of Sept. 30. Its sales increased to $312 million for the nine months ended Sept. 30, a 20% gain from the same period in 2018. Its net loss widened to $67 million from $64 million during the same period in 2018.

The company's backers include Target Corp. and Dani Reiss, the chief executive officer of Canada Goose Holdings Inc.

The offering was led by Morgan Stanley, Goldman Sachs and Jefferies Financial Group Inc. The company's shares are trading on the New York Stock Exchange under the symbol CSPR.


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