Please ensure Javascript is enabled for purposes of website accessibility

Casper Sleep Drastically Trims IPO Offering Price

By Asit Sharma – Feb 5, 2020 at 3:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The adjustment isn't likely to inspire confidence among potential investors.

On Wednesday, Casper Sleep, the online seller of mattresses and sleep accessories, dramatically shaved the amount of money it expects to raise in its upcoming initial public offering.

In an amendment to its "S-1" registration statement filed with the SEC, Casper lowered its offering price to between $12 and $13 per share, from a range of $17-$19 disclosed in its previous filing on Jan. 27. At the midpoint of these respective ranges, the company will haul in about 31% less than it initially expected.

In its filing, Casper notes that after fees associated with the public debut, it expects to raise $92.5 million if its stock prices at $12.50 per share. This amount may rise to $107 million if underwriters exercise their option to purchase additional shares. 

A man inspects a sleep mattress in a store.

Image source: Getty Images.

What this means for investors

In its investment prospectus, Casper bills itself as a fast-growing, tech-savvy omnichannel retailer. Indeed, the company has expanded revenue at a 45% clip over the last two years and boasts impressive stats such as a 20% repeat customer rate -- not bad for the mattress industry.

But with high overhead expenses, Casper currently operates at a loss, booking negative net income of $67 million on $312 million in sales in the first nine months of 2019.

Given an IPO market that's turned more cautious after some high profile stumbles 2019, Casper's red ink is likely a factor behind its wilting offering demand.

The company plans to use its IPO proceeds for "working capital purposes" and to fund growth. But due to its negative margins and trimmed issuance, investors may want to monitor Casper's quarterly results for a while before jumping in. Shares will trade on the NYSE under the symbol "CSPR."

Asit Sharma has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NYSE owner Intercontinental Exchange. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intercontinental Exchange, Inc. Stock Quote
Intercontinental Exchange, Inc.
$90.75 (-2.47%) $-2.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.