(Bloomberg) -- Online mattress retailer Casper Sleep Inc. plans to raise as much as $159 million in its initial public offering, setting up a test of investor appetite for pioneering firms whose losses have grown with their revenue.
The New York-based company said in a filing Monday that it planned to sell 8.35 million shares for $17 to $19 each. At the top end of the range and excluding the over-allotment option for underwriters, the company would be valued at just over $744 million -- a drop from a previous assessment of $1.1 billion.
Casper, founded in 2014, became one of the leading brands in the so-called “bed-in-a-box” industry thanks to its pioneering status in the niche and savvy marketing. Since then, a slew of competitors have emerged in the U.S. and abroad. From 2016 to September 2019, it spent $422.8 million on marketing, according to an earlier filing.
The mattress retailer is selling its story of rapid growth. But Wall Street may have lost its tolerance for well-known startups that burn through cash since the meltdown of WeWork, which cancelled a planned IPO and saw its valuation tumble last year. Casper now has to convince the market it has a clear path to profitability.
The company’s backers include Target Corp. and Dani Reiss, the chief executive officer of Canada Goose Holdings Inc.
Casper, which also had 60 stores in the U.S. and Canada as of Sept. 30, had $312 million in revenue for the nine months ended in September, a 20% increase over the same period the previous year, according to its filings. Its net loss widened to $67 million from $64 million during the same period in 2018.
It warned that its revenue growth might not keep pace with marketing costs and other operating expenses, including spending to expand internationally.
Casper fired about 30 employees as part of a reorganization in December, people with knowledge of the matter have said.
The share sale is being led by Morgan Stanley, Goldman Sachs Group Inc. and Jefferies Financial Group Inc. The company plans to list the shares on the New York Stock Exchange under the symbol CSPR.
(Adds details on challenge of swaying investors in fourth paragraph.)
--With assistance from Crystal Tse, Matt Townsend, Jonathan Roeder and Elizabeth Fournier.
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