Casper’s IPO Wake up Call
Meet Casper, not a mattress retailer, but “the Nike of sleep.” It’s for millennials, by millennials, and apparently, a growth stock to-be after it goes public today. However, not everyone is convinced. Some investors think it’s a Silicon Valley imposter!
Casper is the first big-time initial public offering (IPO) of 2020, but it’s not the first big-time unicorn to turn “story-stock.” Like Uber, Lyft, and Peloton before it, Casper’s IPO prospectus boasts the heady combination of blue-sky growth potential, a revolutionary approach to an existing market, and a billion-dollar private valuation.
All these factors make for a compelling story and could set the firm up to raise more money and buy out smaller start-ups. However, with no profits to show investors, Casper isn’t worth much without that story.
Uber and Lyft crumbled last year after Wall Street caught on to their alice-in-wonderland stories, no longer confident the ride-hailing apps could answer a business’s existential question of profitability. Shares in both companies closed the year down double-digits from their IPO levels.
Clearly, the mood has changed somewhat among investors. Even venture capitalists who poured the early billions into these firms are now hinting, “chop chop, time to make some money!”
Casper’s initial public offering today has been repriced at between $12 and $13 from $19. That’s a third of the company’s valuation conceded by underwriting banks as skepticism grows around its break-even potential. With a grand vision of dominating the emerging “global sleep economy,” the market is being thrown bait here by Casper. Fool me once…
The Invstr community ought to keep a close eye on how the market reacts to Casper’s IPO call signs today, especially given that many other tech IPOs this year will share similar traits. Will it fly out of the traps with buy orders a plenty, or suffer a drowsy crash?
