So No More Nightmares?
-Casper shareholders and Casper the friendly ghost…probably
Shares of Casper Sleep (CSPR) almost doubled in Monday’s trading session following an announcement that private equity firm Durational Capital Management will take it private in a deal that will value the company at around $286M. That is roughly a 94% premium from Friday’s close of $3.55, and less than one third the $1B buyout offer from Target back in 2017. Durational Capital will pay $6.90 per outstanding share and expects the deal to close in Q1 of 2022. The stock closed the day up 88.6%.
- CEO Phillip Krim said the company had been speaking with “outside advisors” as well as Casper’s board of directors for several months in order to assess various financial options. *read: sell our soul to the highest bidder*
- In what can only be considered a “no sh*t Sherlock” situation, Casper’s board unanimously supports the deal and recommends *read: begs* shareholders to do the same.
- Casper, which was founded in 2014 and considered one of the innovators of the direct-to-consumer movement, has been more or less a flop since its February 2020 IPO. Hmm, I feel like something else started around that time.
- The company has lost a little more than two-thirds of its value in the last 18 months, and what was at one point valued at more than $1B as a private business, now has a market cap of about $147M as of Friday’s close.
- But wait, there’s more! The company announced that losses in Q3 2021 ballooned to $25.3M ($.61/share) from a loss of $15.9M ($.40/share) in Q3 2020.
Casper IPO’d last year at $12, so in the immortal words of Jon Bon Jovi, “We’re halfway there!” As a 43-year old man, I hate myself for actually writing that. It will take a lot of work to get the stock back to its IPO price, but at least the company is moving in the right direction. Keep an eye out for additional news regarding the deal.
I guess money does grow on trees
Shares of Dollar Tree (DLTR) spiked Monday thanks to Friday evening’s news that activist investor Mantle Ridge had taken a $1.8B stock position in the company. Mantle Ridge is asking (probably not nicely) for Dollar Tree to make changes to its Family Dollar stores in order to improve the overall stock performance of the company. DLTR closed out Monday’s trading session up 14.3%.
- Mantle Ridge is working with Richard Dreiling, former CEO of rival Dollar General (DG), who many credit for turning around that company.
- Family Dollar was acquired by Dollar Tree in 2015 for $9B but has been a bigger drag on DLTR’s revenue than your kids have on your hopes and dreams.
- Dollar Tree has already said that they will charge more than $1 for some products (kind of defeats the whole dollar thing) and may look to hire new directors to the board as another potential change to boost the stock price.
Over the past five years, Dollar General has rallied over 190% while Dollar Tree has gained just over 60% over the same time period. At no other point in history would a 60% gain over a 5-year window be considered a failure, but that’s where we are in this historic bull market. Keep an eye on additional changes being made at DLTR as some investors might look to pairs trade the two companies. In other words, one may look to go long DLTR and short DG as a hedge moving forward.
The Splunk Funk
Data analytics provider Splunk announced on Monday that their CEO and president of six years, Doug Merritt, has stepped down. Replacing him is Graham Smith, chair of SPLK’s board and a former Salesforce CFO. Shares dove more than 18% when the public caught wind of the transition. Graham. Look at me, son. It’s not your fault.
- The company claims they gave Merritt the boot because he was getting in the way of their growth mindset (how’s that working for you, huh?). Given the rate of executive turnover at this company, though, you gotta start wondering if Splunk’s the a*shole in these relationships…
- This is the worst day the firm has had since December 2020, when a measly Q3 earnings report shaved 23.3% off their stock. To find out whether Splunk can run it back again this year, check in on December 1st when their earnings report drops.
Splunk’s transition to cloud software has made the past couple years pretty rocky, but it’s also set them up for consistent long-term growth. Silver Lake thinks so, too, according to the billion dollars they gave Splunk back in June for restructuring to this end. If you’re looking for quick returns, SPLK is probably not for you, but given their fundamentals and the board’s focus on profits, the long-term outlook may be rosier for patient investors.