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Casper has filed to go public. It won’t turn a profit any time soon

Casper, the mattress-in-a-box company that revolutionized the way for people to buy their beds, filed paperwork on Friday to offer its stock to the public.

The New York-based startup launched in April 2014 after raising almost $2 million from venture capital firms and angel investors, including rapper Nas and actor Ashton Kutcher. It captured consumers’ attention first with its mattress that fit into a cardboard box the size of a mini fridge and has since expanded to a portfolio of products including dog beds.

Although revenue has grown fast — it brought in $358 million in annual sales in 2018, up 38.7% from the prior year — the company has yet to make money.

Casper incurred net losses of $92 million and $73 million in 2018 and 2017, respectively. Despite having few stores compared to its rivals, Casper pays a lot of money in shipping, which is a pricey business. The company says it believes it will continue to lose money in the future.

Last year, Casper was valued at $1.1 billion. Target has invested in the company and Casper sells within some Target stores.

The company plans to trade under the ticker symbol “CSPR” on the New York Stock Exchange.

“What Nike did for exercise, what Whole Foods did for organic foods, we want to do for sleep,” Casper CEO Philip Krim told CNN Business in an interview last year.

Casper may have capitalized early on with its first-mover advantage, but it now has to contend with several competitors with a similar business model.

There’s Purple, Saatva, Leesa to name just a few.

In its filing, Casper described major risks that could impact the company. Casper is staking its future on a bet that a multi-billion-dollar market exists for what it’s calling the “sleep economy.”

But there is no guarantee the “sleep economy” will grow like Casper hopes.

“The market for sleep products and services as a distinct retail category continues to evolve,” Casper says. “It is uncertain whether the demand for our sleep products and services will continue to grow and achieve wide market acceptance.”

Scott Galloway, marketing professor at NYU Stern School of Business, was less than impressed with Casper’s IPO announcement.

“Look, it’s a good brand, with an innovative product, good management. But the red flag is that it’s not profitable,” said Galloway. “The fact that its losses are not diminished by increase in sales growth is troubling.”

“This is a nice company that probably should not be public. That’s my summary of the news,” he said.

cnn