I love a good night’s sleep.
Without it, I wouldn’t have enough energy to do everything that I do — run IPO Payday and Daily Profit Machine here at Raging Bull, spend time with my family, help lead a campus ministry, and manage other streams of income — all while keeping a big smile on my face.
So when I see an ad for a mattress on the top of my google search page that says, “Over 50,000 five-star reviews,” “Join over 1,000,000 happy sleepers,” and “100-night trial, painless returns,” you know I’m interested.
Well, it just so happens that Casper, the company behind this trending and ergonomic mattress, will soon IPO.
As if dreaming of sheep wasn’t enough already, the dreams of sheep and money that I’m anticipating when this company debuts could help me wake up fresh and profitable in the months and years ahead.
So today, I want to talk about everything we should know about this IPO and why I’m leaning short on this company right out of the gate.
Casper’s Customers Will Sleep Like Babies… While Its Investors Lie Wide Awake
Casper has a great product and it’s a nice little company, but I don’t think it should be going public.
Sure, it carved out a niche in the mattress industry with a soft yet firm material and great branding. But I’m not confident it can live up to the full potential described recently by the company’s CEO, Philip Krim.
He said recently, “What Nike did for exercise, what Whole Foods did for organic foods, we want to do for sleep.”
I simply still have doubts. While the company’s revenues are growing — annual sales were $358 million in 2018, a 38.7% increase from 2017 — the company still has yet to turn a dime.
The company has faced more and more imitators in the past couple of years, which is a cause for concern over its long term prospects.
One key set of numbers doesn’t look great either. Net losses were $92 million in 2018 and $73 million in 2017 — in part due to the tremendous cost of shipping these “beds-in-a-box” that would have you believing the product came from Tajikistan.
Also, the marketing of the product has been anything but word of mouth, as the company spent $422.8 million between 2016 and 2019 to seize more eyeballs — although rapper Nas and actor Ashton Kutcher both have a venture capital stake and are probably pimping it on social media.
In 2019, Casper had a $1.1 billion valuation, thanks to lots of other private funding that included retail giant, Target corp.
The company plans to list on the NYSE under the symbol CSPR, so get ready to see those four letters as my alerts hit your inbox in 2020.
The Lead Up To Casper’s IPO
Of course, the fundamentals of Casper’s business model will be a factor in its pricing. However, as we all know, sometimes the market doesn’t care a whole lot about them. You see, traders are forward-looking and they’ll also be focused on the hype.
The global sleep economy will play a factor in the pricing of the IPO. According to Casper, a research firm noted the global market size for the “sleep economy” reached a whopping $432B, and is projected to grow by 6% annually to $585B by 2024.
There’s also one interesting fact that I found in Casper’s SEC filing. Influencers will play a role. Casper pays people with massive online followings to talk about its products… and if there’s positive feedback, it could directly affect the stock’s price on its first trade date. On the other hand, if they receive negative feedback… well, the IPO could turn into a dud real quick.
It’s still early for this IPO, so I’ll be keeping a close eye on it.
For the most part, I’ll be analyzing SEC filings, as well as any other news that comes out about Casper. As the IPO date approaches, there will be a few things to focus on:
- The lead underwriters and how other IPOs they take to the market are performing (Goldman Sachs, Morgan Stanley and Jefferies are the lead underwriters).
- The company will list its shares on the New York Stock Exchange (so I don’t think it will be as volatile right out of the gate).
- The demand, shares offered and pricing range.
On the day of the IPO, I’ll make sure to send my clients a trading plan, and it’ll be as simple as red, green, or yellow light. Not only that, but after the IPO, I’ll be focused on the lifecycle of Casper. If and when the options go live, I may look to buy puts if I see weakness.
If you want to have a clear-cut plan and edge when Casper IPOs, check out this training lesson here.