Despite initially negative expectations given its decision to price its IPO at the lower end of the range, online mattress and sleep products company Casper has surprise analysts by surging by more than 30 percent during its first day of trading. Casper's stock finally closed up by 12 percent on Thursday.
The company opened up its IPO at $12 per share, the lower end of its target range on Wednesday. The price was determined after the company decided to cut its target price from a range of $17 to $19 per share to $12 to $13 per share. The decision somewhat resulted in a decline in investor confidence for the company's IPO, which was fortunately proven wrong this week.
During its first day of trading, Casper's stock in the New York Stock Exchange, under the ticker symbol "CSPR," surged to as high as $15.85 per share before settling down to $13.50 per share.
Based on its closing price on Thursday, Casper's market valuation now stands at around $575 million. This is unfortunately close to half of the company's market valuation when it was still a private business, back when it was given the so-called unicorn start.
Just like other unicorns, which were not profitable when they went public, Casper was scrutinized for its business model. Casper is also facing some market blowback from the entire WeWork IPO Fiasco last year, which had placed a negative connotation over startups trying to go public.
Casper is currently still losing money and its previous quarters have all ended up in losses. For the first nine months of 2019 ending in September, Casper had reported a net loss of $67.3 million on revenues of $312.3 million. Some analysts have pointed out that the company has managed to significantly increase revenues of the past quarters, indicated that it could become profitable in the coming quarters.
Casper's CEO, Philip Krim, remains unfazed by the criticism and the IPO's performance. Krim mentioned in an interview that valuations are just temporary and what is really important in keeping their focus on building the business. The company is planning to open even more stores this year, a move that some have pointed out could raise expenses and increase overall losses.
The company, which was originally established in 2014, is one of the pioneers of the mattress-in-a-box concept. Casper currently has more than 60 stores in the United States, with goals of having more than 200 over the next few years. The company has so far expressed interest in expanding further into the "sleep market" by offering other products and services.
