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Bed-in-a-box pioneer Casper once called itself the “Nike of sleep.” After its lackluster IPO, Skechers might be a better fit.
Yesterday, Casper closed its first day on the New York Stock Exchange up 13%—but that came after it dramatically lowered its price target in the days leading up to its public offering. Casper’s valuation is currently hovering around $535 million.
Casper was privately valued at $1.1 billion last year. But revelations from its January IPO filing confirmed suspicions that its unicorn status was shaky.
- Casper’s net loss widened to $67 million in the nine months ended Sept. 30 from $64 million during the same period in 2018.
- As it tried to acquire more customers, it spent a whopping $114 million on marketing in the first nine months of 2019.
Why the dark circles?
Casper’s spending didn’t stop at coating New York subways in branded puzzles.
- Growing its physical store count to 60 locations in the U.S. and Canada fueled Casper’s losses in 2019.
- Refunds, returns, and discounts from its 100-night trial program cost $81 million in 2018. Casper’s not making that money back because mattresses can’t be resold after they’ve been used.
The underlying problems: Unless you’re refurbishing a global hotel chain, mattresses are a once-every-10-years purchase. At the same time, Casper’s competition in the so-called sleep economy has increased. There are 175 "bed-in-a-box" Casper rivals in addition to legacy players like Serta, per a GoodBed estimate cited in the NYT.
- To supplement its mattress business and stand out from the crowd, Casper’s entering sleep-adjacent categories including nightstands, pet beds, and CBD gummies.
Looking ahead...expect Casper to stretch wholesale collaborations beyond its Target partnership. CEO Philip Krim told the NYT that additional retail partners and new stores could reduce its marketing spend.
My takeaway: Supporting products and offline outposts are textbook D2C growth maneuvers. But post-IPO Casper is beholden to public market investors—and no weighted blanket can muffle their concerns about Casper’s pricey expansion plans without a path to profitability.