Casper’s Unicorn Ambitions In Jeopardy After S-1 Filing

eCommerce mattress merchant Casper Sleep Inc. forecasts that its initial public offering (IPO) valuation will be far under the approximate $1 billion it had for its most recent funding. The IPO will try the demand of investors for money-losing firms after WeWork’s IPO fiasco in 2019, Reuters reported.

Public market investors have historically expected firms to make a profit within around 18 months of an offering. However, investors have been willing to tolerate losses in light of fast growth. But lately, deals have indicated that investors are getting more particular about funding loss-making firms.

IPO Boutique Senior Research Analyst Jeff Zell said, according to the report, “Valuations in the private market are currently under the microscope, especially with unicorns, as they attempt to tap the public markets.”

Casper, for its part, was valued at $1.1 billion in March of last year after a fundraising round. The company expects the IPO of 9.6 million shares to be priced in the range of $17 to $19 per share, according to a regulatory filing. The IPO would provide the company with a valuation of $768 million and would bring in $182.4 million at the high end. Casper noted that it would use a large share of the net proceeds to back growth.

Earlier this month, news surfaced that Casper filed regulatory paperwork to take the company public on the New York Stock Exchange. The eCommerce mattress merchant said it lost $92.1 million in 2018 and $73.4 million in 2017, per its SEC stock registration statement.

The company, which started selling mattresses on the web five years ago, plans to list under the symbol “CSPR.” Casper now offers lamps, sheets, pillows and other bedroom accessories, and has opened its own physical stores and forged wholesale partnerships.

The mattress market has seen a flurry of new entrants, with the inclusion of Tuft & Needle, Nectar, Purple and Leesa.