Casper’s IPO: How Returns Can Take Down A Unicorn

Last week, Casper rang the bell of the NYSE and was met with fairly disappointing results. With stocks selling at $12 on the first day, the former Unicorn had their valuation slashed in half, and it has yet to recover with prices hovering ~$10. Has the market finally turned on “growth at all costs” startups? Can an unprofitable D2C consumer brand with $80M of losses in returns (23% of its revenues) thrive?

We spoke with Forbes about the uphill battle Casper has to climb to become a sustainable business.

The Bottom Line

It seems like a good bet that valuations will start to get more rational for startups. For example, the last round of venture funding for Casper came to $1.1 billion. But currently, the market cap is under $500 million.

And finally, Casper does highlight that disrupting a category is far from easy. This is particularly the case with industries where consumer habits are ingrained. Casper has recognized this as the company has been investing heavily in its own brick-and-mortar operations.

“Casper’s IPO price slashing shows that the market has finally hit the snooze button on companies that are all growth and no profit, and other startups should take heed,” said Navjit Bhasin, who is the founder and CEO of Newmine. “While Casper was a category-maker in 2014, the low barriers to entry for competitors have resulted in a saturated market of almost 200 ‘me too’ bed-in-a-box companies that have very little differentiation in terms of branding and customer experience. This creates a situation where there are several competitors looking to attract customers for high-ticket, infrequently purchased items, and there’s a ceiling for how much market share online bed-in-a-box companies can achieve.”

Will you be sleeping on this stock opportunity?

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