Please ensure Javascript is enabled for purposes of website accessibility

Why Casper Sleep Stock Rallied 28% at the Open Today

By Reuben Gregg Brewer – Apr 26, 2021 at 9:33AM

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

Shares of the mattress and bedding maker took off with a little help from a Wall Street analyst.

What happened

Shares of Casper Sleep (CSPR), which makes mattresses, beds, pillows, and sheets, rose a quick 28% when trading got under way on April 26. That massive gain in the first half hour of trading wasn't driven by news out of the company, but by an analyst upgrade.  

So what

Investors tend to like it when analysts make positive calls on stocks, so it's not shocking that Casper rose on the news of a Wedbush upgrade. While the price target improvement wasn't all that large on an absolute basis, with the analyst taking the call from $10 per share to $10.50, the stock closed out the prior day of trading at roughly $7 per share, so there's notable upside if the Wedbush analyst's target proves accurate, even after today's rather large early gains.  

A hand holding a pen pointing to a candlestick chart with stock quotes in the background.

Image source: Getty Images.

The bigger change, meanwhile, was the shift from neutral to outperform. Although every Wall Street firm is different, that's basically making Casper a buy. The analyst believes the company has a solid path for revenue growth and, eventually, profitability. All in, this was a pretty positive call on the stock.  

Now what

Casper is a growing company, but as of yet it is not a profitable one. Long-term investors should probably take the Wedbush update with at least a small grain of salt. Yes, today's call is good news. Yes, it appears that Casper is moving in a positive direction, business wise. But neither of these facts offset the fact that the market is pricing in a lot of good news today for a company that is still bleeding red ink. If the enthusiasm doesn't hold, the stock could quickly fall back down to earth.  

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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

Casper Sleep Inc. Stock Quote
Casper Sleep Inc.

*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.