Casper has priced its IPO at $12 per share, well below the initially planned $17 to $19 per share, according to CNBC. The pricing values Casper at $476 million, less than half the $1 billion valuation the retailer had earned during private fundraising rounds, which designated the company as a retail unicorn.
The mattress retailer had planned to raise as much as $182.4 million through its IPO but is now expected to fall well short of that goal. The proceeds that do come in will be used for working capital, funding growth and other general corporate purposes.
The drop in value has been attributed to several challenges faced by the company. One of the most prominent is Casper’s shaky financials: the retailer recently reported a net loss of $67.3 million on revenue of $312.3 million in the nine months that ended September 30, 2019. The fall of WeWork has also clouded the wider startup market and made investors cautious.
Additionally, Casper is facing fierce competition from rival mattress companies, including Nectar Sleep, Serta Simmons’ Tuft & Needle and Resident. Casper has been expanding into areas like furniture, pillows and fixtures, and striking up partnerships with retailers including Costco and Amazon as part of its goal of becoming part of the global “sleep economy” rather than remain a mattress-only retailer.
Casper also is developing its own brick-and-mortar presence, and has already opened 60 out of a planned 200 physical stores. However, the expected “halo effect” with offline and online sales boosting each other, has not come to pass. Casper stores captured 56% of the traffic at seven retailers tracked by Blis between May and July 2019, but these visitors didn’t translate into repeat purchases. The study found that 80% of shoppers shopped at the retailers in question during only one out of the three months, signaling high turnover rates.