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Casper was valued at US$1.1-billion in March, 2019, after a fundraising round.CARLO ALLEGRI/Reuters

Casper Sleep Inc., the online mattress retailer whose investors include actor Leonardo DiCaprio and rapper 50 Cent, expects its initial public offering valuation to be well below the roughly US$1-billion it commanded in the last funding round.

In a regulatory filing on Monday, the company said it expects the offering of 9.6 million shares to be priced between US$17 and US$19 a share. At the top end of the range, the initial public offering will raise US$182.4-million and give the firm a valuation of US$768-million.

Casper was valued at US$1.1-billion in March, 2019, after a fundraising round. The offering will test investor appetite for money-losing companies after WeWork’s IPO debacle late last year.

In the past, public market investors have typically expected companies to become profitable within 18 months or so of an IPO. But investors have been willing to overlook losses in favor of rapid growth. Recent deals, however, suggest investors are becoming more selective about loss-making companies.

“Valuations in the private market are currently under the microscope, especially with unicorns, as they attempt to tap the public markets,” said Jeff Zell, a senior research analyst at IPO Boutique.

“The biggest hurdle that Casper Sleep is going to have during the roadshow process is proving to investors a viable path to profitability while competing in a highly competitive industry.”

Launched in 2014, Casper, along with fellow online mattress retailers such as Purple, Nectar Sleep and Tuft & Needle, has squeezed the industry’s old players.

Led by its co-founder Philip Krim, Casper made its name by selling one “universally comfortable” type of memory-foam mattress, as opposed to offering options for different firmness and designs. It now sells three different types of mattresses.

Investors hope that Casper’s increased popularity with urban millennials will ensure it does not share the same fate as Mattress Firm Inc., the largest U.S. bricks-and-mortar mattress retailer that filed for bankruptcy protection in 2018.

Casper brought in revenue of US$312.3-million for the nine months ended Sept. 30, up 20 per cent higher from a year earlier. For the same period, it posted a net loss of US$67.3-million, expanding slightly from the prior year.

Casper said it would use a sizable portion of the net proceeds to fund growth.

The New York-based company’s investors include retailer Target Corp. and investment firms Lerer Hippeau Ventures, Institutional Venture Partners and New Enterprise Associates.

Morgan Stanley, Goldman Sachs Group Inc. and Jefferies Group LLC are the lead underwriters on the IPO.