Is Casper Sleep Stock A Good Buy?

Casper Sleep Inc. (CSPR) is an e-commerce company that offers sleep products both online and in stores. It was launched in April 2014 and recorded $1 million in sales in its first month. The company’s focus on improving sleep quality, reinventing mattresses, and improving the customer experience has helped Casper become a leader in the $14 billion industry in a very short period. With the idea of creating an ideal sleeping environment, the company has managed to partner with many big brands. In 2018, it partnered with American Airlines to design sleep products such as pillows and blankets for its passengers.

The company went public on February 6, 2020, at $12 per share on the New York Stock Exchange. CSPR stock jumped 27.1% on April 26 after Seth Basham, an analyst at Wedbush Securities, upgraded his price target to $10.50 from $10.00. He wrote in a note to clients:

 “Casper Sleep is in the early stages of capturing market share with its comprehensive focus on sleep and wellness, and its strong brand recognition and broadening product lines and distribution partners gives it the ability to convert more shoppers to customers.”

Q4 Earnings Recap

Casper’s global revenue was recorded at $150.3 million for the fourth quarter of 2020 and EBITDA loss was $3.5 million. Despite the COVID-19 related challenges, North American revenue increased by 25.8% and EBITDA improved 80% in the fourth quarter which was driven by strong e-commerce sales resulting from a change in consumer behavior and their greater emphasis on health and wellness. The company was successfully able to manage the increasing demand for its products although some analysts believed the company would face supply chain issues. The company has leveraged its brand beyond mattresses and recorded a 35% increase in its pillow line. Casper also partnered with over 20 retail stores in 2020 including Sam’s Club, Ashley HomeStore, Denver Mattress, Mathis Brothers, and Nordstrom. Retail partnership revenue grew 42.8% and direct-to-consumer channel revenue grew 19.1%.

Commenting on this better-than-expected financial performance, Philip Krim, CEO of Casper said:

“Casper is well placed to continue gaining market share in a wide market. We’ve developed a strong brand around our creative mattress designs and sleep items, as well as a seamless shopping experience that encourages our growing customer base to stick with us. As a result, we have a strong base for further expansion in 2021.”

Where there are thousands of mattress models offered by various brands with almost similar features and quality, Casper aims at providing an affordable, high-quality single model with a 100-day trial period and free delivery. While it may sound absurd for many new businesses to provide free delivery and return options with no extra charges, the company has an effective system in place to cover these costs. The company ships its mattresses in a box that is the size of a mini-refrigerator and thus reduces the cost of shipping. This is how Casper got the name “bed-in-a-box” maker. On the other hand, if any of its mattresses are to be returned, Casper donates those to a local charity instead of restocking and reselling them.

Industry outlook

The mattress market in the United States is expected to grow at a CAGR of 3.5%to $22.5 million by 2030. North America is projected to dominate the global mattress market because of increased household spending, rapid growth in the real estate and hospitality industries. The demand for mattresses dropped in 2020 due to the COVID-19 outbreak. The pandemic-related measures resulted in job losses with businesses shutting down and closing operations.  However, the industry is poised for a strong recovery once the economy reopens fully, which could be as soon as the second half of this year.

According to industry forecasts, the memory foam product segment is expected to expand the fastest in the U.S. mattress market. The change in market demand from innerspring to memory foam mattresses has been attributed to the increase of the direct-to-customer (DTC) model.


Casper continues to focus on increasing its brand awareness, strengthening customer relationships by understanding their unique requirements, and providing quality customer servicing. The company, with its strong product portfolio that promotes healthy sleeping qualities, stands to benefit from broader macroeconomic trends such as the growth in popularity of healthy living concepts. The company, however, is yet to turn profitable, but Casper Sleep stock has already appreciated 40% this year. Investors, therefore, should ideally wait for a better entry point to invest in this high-growth company.

The author does not any shares mentioned in this article.

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