Casper's sales are surging but it can't stop losing money

Posted January 27, 2020 8:55 a.m. EST

— Mattress startup Casper has big ambitions to become a publicly traded wellness company. The problem is it can't stop losing money.

The company reported Monday sales soared 23% to about $439 million, but it lost about $94 million in the past quarter. Its loss was about 2% more than its losses during the fourth quarter of 2018.

Casper blamed the losses on expenses and marketing to bolster its growth in retail stores. It also said it was spending a lot of money on developing new products to move beyond the saturated mattress-in-a-box market. Sales and marketing expenses continue to be a heavy burden on Casper. It spent roughly $155 million in 2018 — an increase of 23% compared to the year prior.

The New York-based startup filed to go public earlier this month. Casper launched in April 2014 after raising almost $2 million from venture capital firms and angel investors. It plans to trade under the ticker symbol "CSPR" on the New York Stock Exchange.

But mounting losses make for a difficult environment in which to go public, especially as investors have gotten burned over the past year by a number of high-profile initial public offerings of unprofitable companies, including Slack, Uber, Peloton and Pinterest. That's part of the reason why Casper, which was once valued at more than $1 billion, will only be worth $705 million if it goes public at the midpoint of its share offering.

Casper 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. It attracted several high-profile investors including rapper Nas and actor Ashton Kutcher.

Casper included major risk factors in its IPO filing, which could impede its growth, including competition and its history of losing money. It hopes to grow with what it's calling the "sleep economy," a multi-faceted approach to get customers to buy several of its products to improve their night.

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."

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