We’re going public, but expect no profits just yet, Casper

Casper Sleep, a privately held company that sells sleep-related
products at several retail stores as well as online, has announced plans to go
public this year. The company whose operations span the UK and US sort to clarify
its financial position, saying it would bring in profits at a later time.

Casper last Friday filed its Initial Public Offering prospectus and
would be the first in an industry it fondly describes as the multibillion-dollar “sleep economy”.

The company is not yet to make any profit and cautioned that the
situation might continue for a while.

Casper’s S-1 filing states that it plans to list its
shares at the New York Stock Exchange (NYSE) under the ticker “CSPR”. The mattress
retailer has selected Jefferies,
Goldman Sachs, and Morgan Stanley as its main underwriters.

Neither the firm nor its underwriter has disclosed the number of
shares to be issued or the price per share.

Casper recorded a net loss of $92.1
million in 2018 and $67.4 million during the first three quarters of 2019.

The self-proclaimed “pioneer
of the sleep economy,” has an estimated market value of $1.1 billion and
is keen on dominating the multi-billion dollar “sleep economy”.

Since 2016 to
last year in September, it spent more than over $420 million on marketing and
advertising to boost its global brand. Its prospectus shows the entity channels
nearly a third of its revenue towards marketing activities.

Tuft & Needle,
a key competitor of Casper, reportedly spent about $15 million on marketing in
2018.

The company’s latest round of funding took place last year in
March but failed to achieve its target, according to sources familiar with the
financing.

Besides the funding, the company’s last year’s $556 million revenue target might have been too
ambitious. Its filings indicate by the close of 2019’s third quarter, Casper
had only recorded $312 million in revenue, leaving only three months to net
more than $200 million to hit its half a billion dollars revenue target.

However, on the bright side, Casper recorded a 40% jump in revenue
between 2017 and 2018, bringing in $350 million in sales up from $250 million.

“We have a
history of losses and expect to have operating losses and negative cash flow as
we continue to expand our business,” read a section of Casper’s S-1 document.

Some prominent
investors in the company include American rappers Nas and 50 Cent; and actors Ashton
Kutcher and Leonardo DiCaprio.