After pricing its shares on the low end of the scale, Casper beats Wall Street’s expectations.
The online mattress company Casper went public on the New York Stock Exchange on Thursday, and its shares jumped 30% right out of the gate. The company set its IPO price on the lower end of the scale at $12 per share, giving it a market valuation of around $500 million.
At the time of this writing, Casper’s shares are trading above $15 per share. But just days before its market debut, no one was feeling that optimistic about the company’s prospects.
The backstory on Casper
Casper is a New York-based startup that initially got its start five years ago. The company sells mattresses and pillows through stores like Target, Costco, and Amazon.
And Casper also has plans to open a fleet of 200 stores across the U.S. The company initially attracted a lot of high-profile investors but has recently come under fire for its lack of profitability.
Over a period of about nine months, the company reported a net loss of $67.3 million. Casper’s revenue continues to increase, but its losses are growing as well.
Casper filed to go public in January, and initially priced itself between $17 and $19 per share. But then the day before it was scheduled to go public, the company announced it had cut its IPO target to between $12 and $13 per share.
The lower price target cut the company’s valuation from $700 million down to around $500 million. And it led many people to question Casper’s path to profitability going forward.
What’s next for the company?
Some of the criticism surrounding Casper is due to the WeWork debacle in 2019. Wall Street is increasingly becoming wary of investing in unprofitable startups. Plus, the market for online mattresses is becoming increasingly saturated.
But the good news for Casper is that so far, its IPO seems to have been a success. According to regulatory filings, the company will use the proceeds from its IPO toward working capital and additional growth opportunities.