Another overvalued money-losing unicorn in a lo-tech ho-hum business wobbled out the IPO window and crashed.
By Wolf Richter for WOLF STREET.
Casper Sleep Inc., a money-losing cash-burning retailer of foam-mattresses, duvets, sheets, and other bedding items, had dressed itself up as some sort of magical tech company to obtain its former hyper-inflated unicorn status with a fantastical “valuation” of $1.1 billion during its last round of funding on March 27, 2019. But it has been one heck of a ride downhill from there.
At today’s closing price, Casper’s market valuation of $312 million has collapsed by 72% from that unicorn “valuation” of $1.1 billion.
Today, on their third day of trading after the IPO, Casper’s shares [CSPR] plunged 9.6% to $9.99, after having plunged 18% on Friday. On their first day of trading on Thursday, they’d initially “popped” under heavy-handed manipulation from their much-lowered IPO price of $12 a share to $15.84, only to sell off within a couple of hours. From the peak of the pop to today’s close, shares have plunged 37% in three trading days:
On March 27, 2019, Casper had raised $100 million. The share price that investors paid at the time reportedly gave the company a valuation of $1.1 billion, which elevated the company into the unicorn cloud, as the media oohed and aahed over this feat. It had come two days before Lyft began its long and hard post-IPO plunge.
Casper’s IPO had been misbegotten from get-go. Its amended IPO prospectus filed on January 27 was instantly picked apart by yours truly, who included a photo of its enticing “mail-order-bride” marketing approach. Casper disclosed that it wanted to offer its shares at an IPO price in the range of $17 to $19 a share. An IPO price of $18 a share would have given the company a valuation of $705 million, down 36% from the $1.1 billion valuation as unicorn.
At the time, I postulated: “The Casper IPO will test just how much appetite there still is in this market for money-losing overvalued cash-burn machines in ho-hum low-tech businesses, such as bedding.”
Turns out, not much appetite. Even this lowered price range wasn’t saleable, and so the company and underwriters set the IPO price at $12 a share last Wednesday evening. Then they worked hard to obtain that initial “pop” Thursday morning and clean out some retail investors, before everyone threw in the towel.
To make sure everyone understood that this wasn’t some kind of online ho-hum bedding retailer, competing with all ho-hum bedding retailers in the world that market their products online in the US on platforms such as Amazon or eBay, and competing with every legacy bedding and foam-mattress retailer in the US, Casper surrounded itself with the aura of being some kind of tech company with an app that would disrupt the world of bedding as we know it.
To this day, Casper has no intention of becoming profitable on a GAAP basis. And so it’s not going to happen anytime soon. But it might come up with its own metric of “profit” – à la Uber – that it hopes to achieve years down the road.
Casper is in the business of marketing, advertising, and selling mattresses, duvets, sheets, and the like, and this is a low-margin business with no barriers to entry, open to the entire world, requiring huge marketing expenses to achieve any kind of growth.
In its Prospectus, the company disclosed that revenues grew only 20% year-over-year to $312 million in the nine-month period through September 2019, but that this $53 million increase in revenues had been obtained by spending $114 million in “sales and marketing” expenses. This is the kind of business Casper is in – not some high-tech app-based disrupt-the-world foam-mattress revolution.
But it spent a gazillion dollars on its fancy and overwhelmingly cool 34,000 square-foot headquarters at 230 Park Avenue South in New York City, as is appropriate for a unicorn. Unicorns spend money. They don’t make money. That’s the deal. But investor appetite for this sort of thing, while still astoundingly robust, is clearly not as robust as it used to be.
Ever since Ford got sidetracked by its Silicon-Valley inspired “Smart Mobility” dream and blew billions on it, sales in its biggest markets have spiraled down. And not just in the US and China. Here are the ugly charts by market. Read… Ford Better Figure Out How to Sell Vehicles, And I Mean Globally & Pronto, Before it’s Too Late
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1) And keep in mind that your typical IPO is only looking to market 15 to 20 pct of shares outstanding…IPO buyers are almost definitionally those who think the most of the company and its prospects…and most likely to value the shares more highly than the mass of the retail share buying base.
2) And just wait until insider share lockups come off a few months down the road and that very large slug of shares start looking for new buyers…
So if hedge funds are the seed investors in these Unicorns, and presumably they invest in more than just one bad apple, where are the US versions of “Woodford Capital?”
We do not hear of any investment companies or high profile investors who are taking the ride on the Unicorns and getting speared by the UniHorn.
Who are they ?
This was pure poetry!! “We do not hear of any investment companies or high profile investors who are taking the ride on the Unicorns and getting speared by the UniHorn.” Well done!
Because the early investors made money and sold out in the IPO
Since they’re way over the rainbow, who cares?
I have worked with a number of “Start – Ups” with exciting value stories, and a range of mid – term growth companies – I learned a valuable lesson after getting my “Pin Feathers” burnt!! – Pay me now, leave the “Stawwwwk Options” for the Suckers!! – Get out early, when the giggles and smiles turn to frowny faces!! – 98% of Start ups FAIL… be prepared to grab the money and run… keep a suitcase, under the bed!!
Yep. Survivor bias will never be cured/is a permanent part of human nature. We remember/revere winners and forget the losers.
I used to talk to lots of tech startup guys, including in the vaunted Apple, in the ’80’s- 90’s. They told stories of burnout, people losing all their startup equity/money. That is the norm, not the big winners.
Many people have gotten rich, but a lot also have just done OK, and paid the price in their “work life balance”.
“gazillion dollars on its fancy … headquarters”: “The opulence of the front office is inversely proportional to the liquidity of the company”. I worked for an internet company in 2000 that did the IPO thing and crashed a few months later. It too had a very opulent front office. Love spending other people’s money.
“Love spending other people’s money.” These people should be in Congress; they are the same breed.
DC is much, much worse – because of the global nature of the scam and the endlessly disgusting self-righteousness about it.
Some good gets done – but a lot serves primarily to screen the “skim” of the political class.
Same here man, it’s fun as hell to work at dumb companies that are going to crash and burn as long as you can pull off one simple trick – get paid in cash and not worthless options.
I know a guy with a PhD in tritium and he’s worked on fusion all his life. Lawerence Livermore. Now retired. Good pay and loved fooling with neat stuff. Brought us 1 gal steel OD colored cans that were 95% ethanol for parties. The Star Wars and flying laser weapons guys had fun till someone finally said Reagan’s “vision” was BS.
But that new armed service should entertain and pay folks for a while.
Like A says, the science visions from non-scientists are fine if you just dig playing with it and get a paycheck. Self crashing cars are another fun one I would have loved to have been in on.
A PhD in tritium. Got it.
Always makes you appreciate this:
https://www.berkshirehathaway.com/
I call it the “Edifice Complex”.
See Sun Microsystems, Borland, and a host of others here in Silicon Valley. Once they get the fancy new headquarters built, they’re done.
So i should sell Apple?
Losing money can NO longer be a business? This is strange.
They will print until the dead horses become unicorn again. Just wait.
Having worked in industries that were actually technology-based, I get a giggle when run-of-the-mill venture-funded commodity companies like WeWork, Uber, DoreDash, as well as Casper Bedding claim to be “technology based”.
Plainly they need to claim to be “blockchain & technology enabled”.
Disruptive and paradigm changing!
New and improved. It will change your life.
Next miracle physical sleep aide that comes out should be called the “Tokay Blanket”. Feel free to steal the copyright, I never owned much but it’s usually been enough.
Actually, that’s a better name for an OTC sleeping syrup. Maybe have a guy sleeping great in a dumpster on the label?
Geritol was 20% alcohol, ya know, and it sure sold well. So maybe they can pay off the right people and get “hydroxy ethane” in it again?
And like I said before, why aren’t people who can drop $3K on a damn mattress sleeping well, anyway?
There very well may be startups next cycle that do things like sell snow cones out of autonomous ice cream trucks, but they’ll attach a camera to the truck with ai recognition software that reads emotions and tries to predict the personalities of the kids and derive the perfect flavor for them. Depriving the kids of choice, a robotic hand will simply hand them a cone with the determined flavor. They will ipo, call it a tech company, and claim they use “advanced ai enhanced analytics to maximize customer satisfaction through augmented predictive modeling” thereby creating unprecedented value in the ice cream truck industry. Investors will flock to value this company at $30 billion.
Rats! That camera means kids can’t through cracker balls or torpedos (the big silver ones) at them anymore. I’d hate to be a kid today, you have to raise hell on a video game instead of figuring your own real thrills out.
Reading this makes my day!!!
What would make my year, and get me to open a bottle of the finest Champagne and guzzle it down, would be for the same to happen to Tesla.
Tesla is Caspers and Uber and Wework and every money burning dog of a company – on steroids.
Gonna happen. But it’ll take a long time. There is too much money lined up behind it at this point.
Tesla has a shot if they can get “regulated-in” because high density cities want electric vehicles.
That’s about the only chance Tesla has.
Interesting point. If Trumpster wins again and Republicans take the House and Retain the Senate, that won’t happen.
I would not call it a chance when something is extremely likely to happen.
Amsterdam wants to ban ICE cars by 2029. Britain wants to ban the new sale by 2040 etc.
@DanS86
America is not the world and Trump will loose New York City and SF. They will likely introduce those bans and then there are the HOA’s.
Tesla has no relation to Uber or Wework. You will be dreaming and hoping they fail for a loooong time. Model Y imminent!
Massbytes,
The Model Y, when it actually shows up, will cannibalize the Model 3, just like the Model 3 is killing the Model S. There are no free lunches in the car business.
And this is where Tesla is in terms of size measured by global vehicle sales, compared to the Top 10 automakers. Tesla is the tiny red speck at the bottom:
The Mustang cannibalized the Falcon for Ford.
Old as the hills.
’64 Falcon parts = ’64 Mustang parts, except for body.
And what is not known as much, is that the small v6 engines, trannies, floorboards, etc. in the low end Mustangs were pure trash for about 5 years. They didn’t figure out what they had for a while, and forgot it when they re-worked the Mustang a few times, probably including this year.
wkevinw ,
re: “And what is not known as much, is that the small v6 engines, trannies, floorboards, etc. in the low end Mustangs were pure trash for about 5 years. ”
It’s not known because it’s not true. The 6-cyl, 200ci engine in the original Mustang was a straight (inline) six, and a 260ci V8 was an option from the get-go, followed by the hugely successful 289ci V8, considered one of the best engines of all time (I’ve owned several, including the 289 I own today). The rest of your comment is suspect based on this untruth.
California Bob,
The first car I ever owned was a 68 Mustang with a 289, 3-speed stick, no AC, no nothing. Bought in 1976. The engine was bullet-proof, the carb and everything else was shitty, speedo had stopped working before I bought it, the whole thing was leaking and things were falling off. But I LOVED it. Shoulda never sold it :-]
Yeah Bob. I’ve seen some BS from boomers here who obviously just chased the $ and missed all the real fun, but that one tops them all. Maybe he just finished off a WS mug full of hard stuff after a bad day at the market or something?
Una warned people about that.
BTW. I like that global chart better than what USA fools buy, as I’ve been a Nissan VQ V-6 fan since I saw Pathfinders with 350-400K still running fine. So now I have a 4.0 and hope they didn’t F it up….I like the fact they seem conservative about “innovating” (like Ford with their Eco-boost) and not changing chassis and body style much and such. Gadgetry onslaught still stinks, but everyone is doing that, in the USA, anyway.
You are correct. Wework and Uber are amateurs when it comes to burning through billions.
Tesla is the grand master! Closing in on two full decades of losing billions year after year after.
In a call of their own!
If one drinks the kool-aid though, one will not see it this way of course
Actually, Massbytes, Elon Musk announced a month or so ago that he intends to stop selling his cars and instead he is going to start an Uber like service – only without the car’s driver – when his autopilot is perfected.
There are too many wild-eyed True Believers behind Tesla. They are about as connected to reality as the Kook-Aid drinkers in Jonestown. It takes a while for financial cyanide to kill.
Here’s the issue: various policies, most importantly the whole raft of actions taken to recapitalize the financial sector after 2008-9, have created a vast amount of money and placed that money in very few hands. Let’s compare that to an historical analogy. By the 1830s the Industrial Revolution had made a cohort of British capitalists and investors incredibly rich. But they had saturated the markets of first generation industrial goods. So where to invest their money? The answer was, the railways. Vast amounts of capital were sunk on the new railway infrastructure. It returned 3-4% per annum, and a whole class of rentiers lived off it for two generations (and in some cases, more–Charles Darwin lived off the dividends of his father’s railway investments and never had to work a day in his life). But today’s investor class would rather burn the money than live off the 3-4% return on a steady investment. They hunger for the 10 bagger, and will throw any amount of good money after bad chasing big returns rather than accept the extremely comfortable lifestyle they could enjoy if they were simply not so greedy and driven. Therefore, Tesla, and a hundred other schemes, will get capital, while modestly profitable businesses will be allowed to wither and die because they offer no chance of a windfall.
Not an analogy at all. Investing capital to create wealth by creating/inventing services and products, passive investing to achieve predictable income from others’ investment and invention, and speculation, are all different things.
And ‘rentier’ has nothing to do with any of them, because monopoly can only be achieved by a State, using force.
Yeah. I recall reading about the already established canal transport types fighting it out with the RR transport bunch back then. Too bad the canals didn’t win, at least for a while. But then we wouldn’t have learned (and then completely forgot) about fossil fuel pollution as quickly.
It’s not easy to find ‘steady investments’ that return even 3-4% these days :(
Willy
That’s only for those investors with enough money to play in PE-Land.
Be glad there are still a few scraps left, they won’t last.
If the IPO window doesn’t close soon we are going to see truly a lot of GoPro. Remember it? Camera manufacturer that was supposed to change the world or something? $90+ share back in 2015 after the IPO? Now, in the midst of the most bullish stock market bubble the NYSE has seen it trades at $3.90, well below the $5 SEC-designated limit for a penny stock.
GoPro has long had atrocious financials but just like Casper they threw, and keep on throwing, enormous sums of money into marketing. Unlike Casper GoPro had a limited window when they could market themselves as selling an almost unique product before everybody else jumped in what was basically a niche market: Casper instead is selling a technology that was first patented in 1929 and a product that Dunlop started selling in 1932. “Hardly unique” is a mild euphemism.
The astonishing thing about Casper however is how they can manage to lose that much money: mattresses have long been one of the most profitable consumer products with truly enormous margins. They are cheap to manufacture, especially if outsource production to an outside specialist like Pikolin, and since it’s something that people only buy once every several year they can be sold at a huge markup. The extremely high margins have long attracted shady “businessmen” of the legitimate and less legitimate type, and provided endless material for jokes on how the local deserted mattress store can stay in business.
Casper has just provided a lot of new material to those jokes.
I’ve seen ads for Casper but they don’t make an impression. OTOH Mike Lindel and his ‘My Pillow’ company seems to have forced his way into the American consciousness much as Andrew Sullivan and Oxiclean did or the ‘Flexi Seal’ guy.
When the pitchman becomes a celebrity in his own right your marketing campaign has succeeded. Of course these are sub $100 products people will whip out their credit card to buy not a $1000 mattress.
Mike Lindell is an avid supporter of President Trump. He is looking for backing from Minnesota’s Republican party to be nominated to run for Governor.
The dude does know how to promote himself, and he’s been pushing his new book – which he publishes himself.
Hell, let me try some promotion …
“Maplewood’s The Original Mattress Factory, on Hwy 36 has great products that are built on-site by hard working Minnesotans. Stop by and try one yourself! – I’m Dan Romig, and I approve this message.”
OK, perhaps this comment should not be posted.
Hard working Minnesotans are always appreciated.
Lindell has made himself more “All-American” than maybe even apple pie. He drips with honesty and good fashioned old hard work. If he runs he’ll probably win.
“Such a good and decent man”…..an old lady in my apt complex immediately put a Ben Carson sticker on her car pre-primary. Same formula.
Wolf, I was really quite interested in buying one these mattresses when I saw the picture that accompanied your last article on Casper.
I tried to get some light correspondence with the gal that comes with the bed to see if she wasn’t a total bitch but I got no answer so I didn’t buy one.
Well, at least you’re named correctly…
HA HA…I get it. Good one.
Erle – that’s a Zero Hedge quality comment.
The “Western” economic model once enjoyed savings institutions, mostly pension funds, that prided themselves on their successful monitoring of all companies that presented themselves for what was once described as a “Public Offering”. (There was never any reference to the word . . . “initial”). The shares were being brought to sale on a stock market where they would be bought by ordinary members of the general public, and as such, it was seen as the duty of the savings industry to ensure the long term stability of the underlying management. You needed to be a well capitalised company with a long term commitment to retention of profit alongside regular dividend payments. Without the necessary record of long term and ongoing success; no company would ever be accepted for their move to have their shares on offer to the general public through a stock market.
Today, the IPO is regularly seen as the only route to raising their initial capital; without which they will be dead in the water.
What needs to be recognised is that the creation of the financial services industry demanded the collapse of the access to capital, raised from their local community holders of spare savings, for a new start up company. Until we return to the previous success; nothing will change.
You’d think in a day when low cost accounting tech (quickbooks, gnucash) is readily available combined with its never been cheaper or easier to set up an interactive website – like a mini-cap market for trading shares – lots of tiny companies, maybe as small as your neighborhood gas station could issue shares and get capital to grow and small investors could have more low PE high dividend stocks to choose from . . .
but what do I know?
its probably better to have the fedgov regulate such small enterprises to the nth degree and make sure that small biz mainly gets capital from one of 10 well connected banks and prop up PE firms so only they can benefit from micro growth stories that way the PE firms and underwiting banks can dump all their trash like Casper and wework onto the public so a few retail gamblers and some highly regulated instu investors will foolishly buy the shares.
Exactly why we shouldn’t let deregulated big finance fund political campaigns.
++++++++++
@Kent & Nbay
Both of you miss the point. More regs on big finance which has the resources to own regulators in the current environment is likely to backfire. Only naive people believe regulations hurt large established businesses.
Instead, eliminate the ridiculous burdens on the micro finance industry and end the fed which props up big finance. Big finance as we know it goes bye bye.
Shrink gov’t to the size of a bathtub so the invisible hands can drown it and bring back the Horse and Sparrow world?
Be careful what you wish for….your programmers don’t post here.
Netflix was selling at a loss to build subscriber base. Once they raised prices they were into profitable times. Uber and Lyft have such potential, but lack achievement. Casper reminds me of 1999 losers hoping to go public and make until the lockup expires to dump shares. Wayfair is a better known online furniture brand. Tesla had positive cashflow last time I checked, but is priced in the stratosphere. There is a large gap between value and growth stocks.
Netflix was selling at a loss to build subscriber base. Once they raised prices they were into profitable times.
Netflix’ debt is increasing faster than it’s ‘profits’ or its revenues, which begs the question as to whether it is actually profitable.
Similarly, US ‘GDP growth’ is also questionable, insofar as debt is increasing faster than GDP. US GDP cannot ‘grow’ without increasing debt, but except for student loan debt consumer borrowing and purchasing power appears to have maxed out and can be expected to decline. Keep an eye on default rates.
David Hall,
“Netflix was selling at a loss to build subscriber base. Once they raised prices they were into profitable times.”
Let me remind you that Netflix only shows an accounting profit due to its aggressive abuse of accounting rules. In a real cash-flow sense, it burns more cash than just about any other company out there. And it constantly has to borrow money (issue new bonds) and sell more shares to fund those negative cash flows. Here is what its cash flow looks like:
Wolf, not million % but million $ rather?
You bet!
Wolf,
Netflix bonds are another one for the “who buys this sh*t”files…at least with the equity you can have swoony, demented, doomed dreams of large capital gains.
With Netflix bonds you are getting what, 4 pct, at absolute best.
And every day for every year until maturity you have sleepless nights thinking of Netflix bleeding cash.
Then, at maturity, you have to worry what sucker can be found to rollover the debt.
Wolf….dead nutz on target re NETFLAKES being proftable. At a point a lonnnng time ago the DVD business was profitable. Then they wanted to become a movie production company that streams content.
Either put every single cent you own in stocks or gold or you are going to be reduced to a beggar in our society.
The central bankers are the very face of evil on this planet and they will see to it.
Okay, I have a question. I am thinking of replacing my old bed. Is this Casper mattress any good? I am bewildered at my options. Complicating my problem is getting rid of my old one. Will Casper carry it out to the dump?
It comes rolled up in big box. My son bought one on sale at Costco for his first real apartment. He is happy with it but 22 year old boys don’t really care very much as long as it is adequate.
At 22 I had an air bed. Deflated, it would fit in a suitcase, and it was adequate for my purposes.
Sweetnight King Mattress in a Box – 12 Inch Plush Pillow Top Hybrid Mattress, Gel Memory Foam for Sleep Cool, Motion Isolating Individually Wrapped Coils, CertiPUR-US Certified, King Size
Bought this for our combined Xmas gift to ourselves on Amazon. Incredibly awesome for my back. We threw a memory Gel foam 4 inch topper on top to soften it and now we sleep like the dead. $590 on Black Friday.
Thanks to both of you. Now I think my buying decision really depends on the person who will get rid of my old bed and put in the new bed. I am getting old but still mow my lawn.
I wonder if my concerns are similar to other’s.
Before making that important decision, you should sleep on it
I’m 73, have a really trashed back (age and severe abuse) but sleep FINE on a 4″ futon on the floor that folds into 3 sections (so I could carry it in a camper shell I used to have) I bought in 2006.
Those mattress tech terms both impress and intimidate me. But I have NO dumping problem, FWIW, should I have an urge to piss money away.
And no, it doesn’t have anywhere near the toe hold a water bed did, but I’m getting close to even Viagra not helping, so the missionary stuff doesn’t matter quite as much anymore.
Target has put 100M into this? Sort of reminds me of the bad times for the Martha Stewart line after Camp Cupcake. Seems to be the right consumer demographic. Add a MyPillow to your Casper mattress, and buy the dip.
“But it spent a gazillion dollars on its fancy and overwhelmingly cool 34,000 square-foot headquarters at 230 Park Avenue South in New York City, as is appropriate for a unicorn.
I’d be more impressed, and perhaps enticed into checking them out further, had they outfitted their HQ in an Industrial Park somewhere in New Jersey.
When this foam mattress frenzy dies, and the mattresses have succumbed to Ozone to become crumbly junk cut up and left at the curb for the trash haulers, lets see how the folks who are funding a wild party on Park Avenue make out.
Latex foam mattresses are cyclical business… as in sellers cyclically trying to push this stuff like it’s some exciting Space-Age technology just made available to the public.
I remember Pirelli foam mattresses being pushed like crazy back in the late 70’s. There was absolutely nothing new in them: the mattresses were just ordinary Dunlopillo (late 20’s technology, then already almost half a century old) rebranded following the disastrous corporate tie-up between Pirelli and Dunlop.
There’s an old Belgian saying which roughly translated goes “People will pay more for the old soup if the cook changes its name” and it’s hard to argue with that.
Casper not only turned to be a ghost but also not exactly a friendly one.
What I wonder is what will happen when there is a crisis of confidence and institutional money flees to safety. Will they go to bonds, or perpetually chase after newly IPO’d firms? At some point, there has to be a return on the money, not just of it, despite what Will Rogers said. Either that, or the fan is going to get a new coat of not-quite paint.
The China virus is a crisis. You may find out shortly
RE:”To make sure everyone understood that this wasn’t some kind of online ho-hum bedding retailer, competing with all ho-hum bedding retailers in the world that market their products online in the US on platforms such as Amazon or eBay, and competing with every legacy bedding and foam-mattress retailer in the US, Casper surrounded itself with the aura of being some kind of tech company with an app that would disrupt the world of bedding as we know it.”
You made my day, once again!!! Great one-liner!!!
maybe lose the girl put the bloody unicorn head on the pillow/mattress under a duvets and watch sales in nj take off.
Its not a ‘head-fake’ pop.
Its market manipulation and fraud. Its market manipulation to raise the share price initially so that the insiders (like Jeff Epstein in the past) can earn a quick, guaranteed few million dollars by being allowed in to buy when nobody else is allowed, then the market manipulation makes a sure profit. Then the stock plunges after all the insider money leaves thus letting the public suckers hold the bag.
This is how America’s mythical markets supposedly allocate resources to where the society needs it. When everyone complains about how China can grow at 5% even in a downturn and an epidemic, the reason we can’t match them is because big piles of money get wasted on frauds like this. Hmmm, which performs better, central planning or a fraud-based economy?
It won’t end until we elect a President and a Congress that starts putting people in jail. And before that can happen, we need to find a way to hold an honest election. And since that would likely be a first in American history, we are in big trouble.
No sympathy for those that lose their shirt on these junk stocks. You really can’t fix stupid.
I just wanted to pitch in some of my thoughts on mattress industry..
I used to work for SSB and they ended up paying $300m change for T&N.. I think T&N was smart enough to sell and SSB foolish enough to buy .. Should have waited for Casper to go public. What’s astonishing is that Casper is nothing but pretty much a WordPress commerce website and contract out mattress to contract manufacturers and for this, they were able to value $1.1 b at some point.
There are 836 companies that sell mattresses in Canada and many more in the US. The margins used to be huge, it costs $150-$375 to make mattress and they sell for $1000+. Chinese retailers flooded the market and now any yahoo off the street can find queen mattress for $99 fob and list it online for sale. Ikea source mattresses from Mexico and sell for $280-$350 retail on IKEA website. There is no way Casper compete or Seally or SSB. ..
Buying T&N to get eCommerce platform to sell SSB mattress is probably the worst thing I’ve seen in my career. 16 months later, SSB still trying to figure out on how to list product, do order fulfilment on warehouse and integrate with the shipping to provide seamless customer experience.
Mattress industries are overall over-rated and until 2014 mattress manufacturers were making shit load of money without any effort. Then come BIB which paved the way for geeks to create a website and sell online. This took big players kindsdown, ssb and seally by surprise. Manufacturing processes are not set up, eCommerce platform, fulfilment is not designed and took hit on the bottom line.
So what’s coming next? Early investors cashed out on casper and now late stage investors will try merger or sell of the company to bigger player. Very likely to an investors such as Advent capital or Seally.
It is very likely that next few years, we’ll see consolidation coming in the US supported by strict import duties on Chinese mattresses. SSB however, will shrink it’s presence in the Canada or probably sell Canadian division to someone else.
If you are thinking the Unicorn IPO bubblemakers are acting like they are on drugs, it’s because they are on drugs.
In the next few years mattresses will be the least of our problems. Time for a reread of “The Big Short”….
Remember when selling stock in a company was a means to raise capital to grow said business instead of a shell game used by big greedy shitweasels to fleece small greedy shitweasels?
Yeah, I’m not that old either.
I can go Casper one better.
This is worthy of Idiocracy 2.0 … no NO… I have a better idea! Zoolander 2.0. Remember the gas pump scene where they blow themselves up?
This is SO much better!!!
Zume did a so-so job delivering its first pizzas in 2016. Although some reviewers on Yelp appreciated the fresh ingredients and speedy delivery—“Clearly better than low end pizza places,” one wrote—several complained about undercooked dough or small amounts of sauce and toppings.
Eventually, Collins’s team gave up on the dream of baking the pies while driving to customers, according to two people familiar with the matter. The cheese tended to run everywhere as the trucks turned or hit bumps in the road. Instead, the oven trucks began parking in central locations, with runner cars or mopeds transporting the cooked pies.
You MUST read this in full:
https://www.bloomberg.com/news/articles/2020-02-13/inside-the-firings-at-softbank-s-robot-pizza-startup?srnd=premium-asia
Question: is Papa Son Softwank’s investment strategy this?
1. Hire monkeys
2. Put dots on a piece of paper with each one representing an investment opportunity
3. Monkeys randomly shoot darts at paper.
4. Papa Son invests based on which dots the monkeys hit
Interesting as EVERYONE has driven by a “mattress shop” in their local area and noticed that NO ONE is in the place. These shops are everywhere so logic tells me that a skilled group of grifters have sold franchisees based on false sales projections and most all of them will go under. This Casper is the same thing, long on emotional garbage, while short on numbers.