Casper lost $80M on mattress returns

Monday, January 13, 2020 by Robinhood Snacks | Disclosures

That "ready to go public" look

Last Week’s Market Moves
Dow Jones
28,824 (+0.66%)
S&P 500
3,265 (+0.93%)
Nasdaq
9,179 (+1.75%)
Bitcoin
$8,162 (+10.82%)
10-Yr US Treasury
1.820%

Hey Snackers,

A Japanese billionaire is giving away $9M on Twitter as an experiment to see if free money boosts happiness. Couldn't hurt.

Markets started last week down on US/Iran military tension, then rebounded to (another) fresh record high. Shrugging off the disappointing December jobs report was this year's resolution.

Snooze
1. Mattress unicorn Casper awakens for an IPO

After a restful private sleep... direct-to-consumer mattress unicorn Casper wants to go public. While you munch açai (food health) after a yoga/spin-hybrid class (workout wellness), Casper thinks you forgot the 3rd pillar of the health/wellness trend: sleep. The self-proclaimed "pioneer of the sleep economy" cut out the middleman and basically put Mattress Firm out of business - so we jumped into its IPO paperwork.

These numbers woke us up... Spoiler: Just like Lyft/Uber/Slack/Pinterest, Casper isn't profitable — despite $358M in 2018 revenues, its loss jumped to $92M.

  • $423M: How much it splurged on marketing since 2016 to stick its dreamy ads across basically every subway car ever.
  • $80M: The amount lost on returns/refunds/discounts in 2019. That cost is 23% of its revenues.
  • 16: The number of new sleep economy products it's working on: sleep pills, vitamins, sprays, medical machines, counseling, and meditation.
  • 100%: In cities with one of the 60 Casper retail stores (great for midday napping), its online sales grow 100% faster than cities without them.
  • 3: The number of direct-to-consumer mattress rivals Casper mentioned (Purple, Leesa, Brooklinen) — there are nearly 200 other copycat competitors it didn't mention.
  • 201, 136, and 9: The number of times Casper mentioned "brand," "mattress," and "profitable" (#priorities)
THE TAKEAWAY

Casper wants to be the "Nike of Sleep"... but it's really the "Peloton of Slumber." Many moons from now, Casper may turn into a profitable, global brand with an array of products. Right now, it's closer to the spin-bike startup that recently IPO'd:

  • Both are dependent on 1 big, expensive product (mattresses/bikes)
  • Both promise new things are coming (sleeping pills/rowing machines)
  • Both may never become profitable (losses this year are bigger than last year)
  • Both rest their future on connecting with you via technology (apps, apps, apps)
  • Both depend on Millennials' still loving health/wellness
Highs

Above and beyond... Beyond Meat stock rose 27% last week thanks to two plant-based patties of good news. First, McDonald's announced it's expanding its PLT sandwich (BLT, sub the bacon for plant-y Beyond) to a total of 52 Canadian locations. Then, alt-meat rival Impossible Foods dropped out of the competition for the holy grail McD's US partnership — Beyond's rival is focused on Impossible Pork over Impossible Big Macs.

Musk be love... Tesla's stock has jumped 35% over the past month, becoming the most valuable American car company ever. GM and Ford produced a combined 39x as many cars as Tesla did in 2019, but the electric carmaker is now more valuable than GM and Ford combined. Oh, and Tesla lost almost a billion dollars over the past year while GM and Ford made over $10B in profit. Investors care more about future profits, and they think Tesla's e-cars are the future.

Lows

Like OPEC, but for chocolate... The Ivory Coast and Ghana combined produce over 60% of Earth's cocoa. Now they're teaming up cartel-style (we're calling it "CHOPEC") to jack up the chocolate ingredient's price 16% by October to boost farmer pay. Hershey, M&Ms-maker Mars, and Oreo-making Mondelez already see cocoa processing prices rising — investors are wondering if/when they'll pass that cost on to you, us, and the Halloween candy bowl.

Aaaand more problems... for Boeing, which released damning internal emails for the Congressional investigation into the flawed 737 Max plane. Boeing employees forgot Mom's advice that almost nothing on the internet is private, describing the plane as "designed by clowns," "supervised by monkeys" via email. They also referenced concealing problems in order to snag FAA approval, and not wanting to put their families on a MAX simulator trained aircraft.

What else we’re Snackin’
  • Chill: How to be calm and cheerful when our brains are wired to worry
  • Save: 'Kakeibo,' the 7-question Japanese art of saving money and spending mindfully (ex: "Does my bank account need this?")
  • Binary Binds: Tech’s 5 biggest battles for 2020 — from securing the presidential election to limiting dopamine-fueled screentime
  • Ask: The job interview questions to throw your interviewer mid-interview about what they actually care about
  • Jet: The NYTimes whips up its 52 places to visit in 2020 (another resolution: Use your vacation days. Also, get to La Paz, Mexico)
Snacks Daily Podcast

Quibi, the mobile-only video streamer, launches in April with 175+ shows/movies and new "turnstyle" tech. The future of TV or an absurdly expensive big bet?

And Sweetgreen is the most innovative company in food right now (cubbies aren't just for kindergarteners).

More in our 15 minute daily pod, Snacks Daily.

This Week

Disclosure: Authors of this Snacks own shares of Beyond Meat, Tesla, Uber, and options of Peloton

ID: 1055693

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