Purple Innovation Stocks Fall 5%

Direct-to-consumer (D2C) mattress brand Purple Innovation shares in early trading on Friday (March 25), announcing that the company will sell 14 million shares of its Class A common stock to the public by Tuesday (March 25) After that, it fell about 5%. 29).

After peaking in the $40 range per share in February 2021, Purple’s stock closed at $6.51 on Thursday (March 24).

Purple’s underwriters will acquire an additional 2.1 million shares of Class A common stock as part of the transaction, with the goal of achieving more than $25 million in cash on hand from the net proceeds of the sale.

According to the September 2020 credit agreement, which was amended twice last month, the money will be used to advance the outstanding balance on Purple’s revolving loan.

Purple will use remaining net revenues above the $25 million threshold for working capital and general corporate purposes, including capital expenditures, other corporate expenses, and acquisitions of complementary products, technologies or businesses. can be used.

Related: Casper, Purple Struggle for Capacity to Meet Growing Demand

In August, PYMNTS announced that Purple Innovation and competitor Casper Sleep are seeing increased demand for their products as consumers increasingly focus on home, health and wellness as the impact of the COVID-19 pandemic begins to ease. reported how they are struggling with supply chain issues.

Sleep Number executives said in July that parts shortages and supplier issues slowed deliveries in the second quarter of 2021, extending delivery times to customers by up to six weeks.

Purple is still recovering from a manufacturing accident in May in which a woman was killed after being caught in a machine. said to have returned to

Purple estimates it lost about $50 million in sales in the second and third quarters of 2021 due to production issues. The company promised to increase production and said it would raise prices to overcome the myriad obstacles it faced.