NEW YORK, N.Y. – Shares of online mattress pioneer Casper Sleep Inc. popped Thursday in their debut on the New York Stock Exchange.
But the New York-based company still faces challenges to prove to investors it can profitably sell mattresses.
Its shares closed at $13.50, up nearly 13% above the $12 IPO price. The stock opened at $14.50 and traded as high as $15.85.
The strong debut is encouraging news after several recent IPO flops and Casper had to sharply cut the price of its IPO. Last month, Casper said it expected to price the IPO between $17 and $19 per share, a range it later lowered to $12 to $13 a share.
Philip Krim, co-founder and CEO of Casper, told The Associated Press he was happy with the debut but said he continues “to be very focused on a long-term vision.” He declined to comment on when the company would become profitable but said that he's focused on driving market share and growth while controlling expenses.
Casper became the first well-known name to reveal plans to go public this year, serving as a test for investors' appetite for unprofitable startups heading for the public markets. Since last year, investors have grown more wary of startups that don't make money. Ride-hailing companies Uber and Lyft debuted on the market last year but have continued to lose money, and both have traded well below their IPO prices. Office-sharing company WeWork scuttled its IPO in September, a crisis that left it on the brink of bankruptcy and forced the ouster of co-founder Adam Neumann.
Matthew Kennedy, senior IPO market strategist for Renaissance Capital, a provider of institutional research and IPO-exchange-traded funds, said that Casper had to discount its IPO price to be more realistic for investors' current state of mind.
“They will need to show they can work toward profitability and that sales growth is not based on marketing spend,” said Kennedy. He said it will also need to show that it can outperform the competition.