The complaint alleges that defendants throughout the Class Period made statements that were false and/or misleading and/or failed to disclose: (1) that Casper’s profit margins were, in fact, declining, rather than growing; (2) that Casper was changing an important distribution partner, which cost the company 130 basis points of gross margin during the first quarter of 2020 alone; (3) that Casper was holding a glut of old and outdated mattress inventory that it was selling at steeply discounted clearance prices, which further impaired the profitability of the company; (4) that Casper was experiencing accelerating losses, which placed its ability to achieve profitability and positive cash flows out of reach; (5) that Casper’s core operations were not profitable, in fact causing the company to suffer over $40 million in negative cash flows during the first quarter of 2020 alone with its quarterly net loss doubling year after year; (6) that as a result of the foregoing, Casper’s ability to achieve profitability, implement its growth initiatives, and expand internationally were misrepresented in the Offering Documents, as the company needed to shutter its European operations, cease all international expansion, dispose of over one fifth of its global corporate workforce, and significantly curtail new store openings for the purpose of avoiding an imminent liquidity and cash crisis, let alone achieve positive operating cash flows; and (7) that as a result of the foregoing, Casper’s revenue growth rate was not sustainable and had not positioned the Company to achieve profitability.
Casper Sleep Inc.
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