SNBR Stock On Track To Decline For 12th Straight Session – Retail Sees Buying Opportunity If Stock Dips Below $1

• The company and its banking partner, Guggenheim Partners, are exploring a potential rescue financing package, according to a Bloomberg report.
• The potential financing would prevent the company from filing for bankruptcy.
• Sleep Number reported a net loss of $59 million, significantly wider than a $5 million loss last year.

Shares of Sleep Number (SNBR) tumbled yet again on Thursday, crashing more than 27%, and are on track to record their 12th consecutive session of losses.

SNBR shares tanked nearly 60% since March 18 and has fallen to its lowest since July 2009.

The Minnesota-based maker of bedding accessories is reportedly seeking emergency financing to avoid more drastic outcomes, including a potential bankruptcy. According to a Bloomberg report, Sleep Number and its banking partner, Guggenheim Partners, are exploring a potential rescue financing package that includes a $50 million priming loan.

Doubts About Operating As A Going Concern

Last month, Sleep Number expressed serious doubts about its ability to continue operating as a going concern, which could hurt its stock and funding options, according to a 10K filing with the SEC. The company also added that it may not have enough cash to meet obligations over the next year.

Sleep Number said that its credit facility includes financial covenants and restrictions that could limit its operational and financial flexibility and may negatively impact its results.

While the company’s fourth-quarter (Q4) earnings declined, the underlying reason was a greater concern. Net sales declined 8% to $347 million, mainly due to weaker store traffic. Restructuring and other one-time costs totaled $14 million, largely driven by a $9.6 million inventory write-down and expenses tied to store closures.

The company reported a net loss of $59 million, significantly wider than a $5 million loss last year.  Following the results, Piper Sandler and UBS cut their price targets on the stock.

Sleep Number has posted a net loss in each of the past 10 quarters and is expected to remain in the red for at least the next two quarters, according to Fiscal.ai data.

How Did Retail Traders React?

Despite the extended decline, retail sentiment on Stocktwits turned ‘bullish’ from ‘neutral’ amid ‘high’ message volumes.

One user said a bankruptcy filing could be on the cards.

Another user sees the stock as a buying opportunity if it falls below $1. It is currently trading around $1.3.

In January, the company announced that Kansas City Chiefs star and three-time Super Bowl champion Travis Kelce became a minority shareholder.

Year-to-date, the stock has slumped by around 85%.

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