Purple Innovation (PRPL) AI Stock Analysis

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Purple Innovation

(NASDAQ:PRPL)

Rating:47Neutral

Price Target:

$1.00

▲(28.21%Upside)

Purple Innovation's stock score is primarily impacted by severe financial challenges, including declining revenue and high leverage. While technical analysis points to a stable outlook, the valuation is unattractive due to negative earnings. Positive developments from the earnings call and corporate events offer some hope but do not outweigh the financial risks.

Purple Innovation (PRPL) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$86.76M

Dividend YieldN/A

Average Volume (3M)915.70K

Price to Earnings (P/E)―

Beta (1Y)1.51

Revenue Growth-10.41%

EPS Growth53.85%

CountryUS

Employees1,200

SectorConsumer Cyclical

Sector Strength73

IndustryFurnishings, Fixtures & Appliances

Share Statistics

EPS (TTM)-0.11

Shares Outstanding108,221,500

10 Day Avg. Volume357,070

30 Day Avg. Volume915,698

Financial Highlights & Ratios

PEG Ratio-0.09

Price to Book (P/B)4.00

Price to Sales (P/S)0.00

P/FCF Ratio-3.22

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$1.00

Price Target Upside28.21% Upside

Rating ConsensusHold

Number of Analyst Covering4

Purple Innovation Business Overview & Revenue Model

Company DescriptionPurple Innovation, Inc. (PRPL) is an innovative company in the comfort technology sector, primarily known for its unique approach to designing and manufacturing mattresses and other sleep-related products. Founded in 2010, the company has gained recognition for its proprietary Purple Grid technology, which offers superior support and comfort. Purple's product line includes mattresses, pillows, cushions, and other sleep accessories, catering to a wide range of consumer preferences and needs.

How the Company Makes MoneyPurple Innovation makes money primarily through the sale of its sleep products, including mattresses, pillows, and bedding accessories. The company employs a direct-to-consumer model, selling its products through its own e-commerce platform, as well as through various retail partners. Key revenue streams include online sales, brick-and-mortar retail partnerships, and licensing agreements for its patented technologies. Additionally, Purple leverages marketing partnerships and collaborations to enhance brand visibility and reach a broader customer base, contributing to its revenue. The company's innovative product offerings and strategic distribution channels are significant factors driving its earnings.

Purple Innovation Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: 5.41%|

Next Earnings Date:Aug 11, 2025

Earnings Call Sentiment Neutral

While Purple Innovation faced a notable decline in overall revenue and challenges in the wholesale and e-commerce channels, they achieved significant growth in their showroom channel, improved gross margins, and strengthened their strategic position through an expanded partnership with Mattress Firm. However, the impact of tariffs and a cautious consumer environment pose ongoing challenges.

Q1-2025 Updates

Positive Updates

Showroom Channel Growth

For the fifth consecutive period, revenue in the showroom channel grew, with a 7% increase in the first quarter and an 11% increase in comparable sales despite operating fewer locations.

Improved Gross Margins

Adjusted gross margins exceeded 40% for the fourth consecutive quarter, improving by 550 basis points compared to last year.

Adjusted EBITDA Improvement

Adjusted EBITDA increased by $8 million and 650 basis points compared to last year, aided by cost savings and restructuring efforts.

Expanded Partnership with Mattress Firm

The partnership with Mattress Firm was expanded to increase Purple mattress slots from 5,000 to 12,000 across the entire store network, expected to drive more than $70 million in incremental net revenue next year.

Successful Product Launch

The launch of the Rejuvenate 2.0 mattress line received positive feedback, with a 60% year-over-year increase in slot commitments across the wholesale channel.

Negative Updates

Revenue Decline

First quarter revenue of $104.2 million was down 13% compared to last year, with softness in wholesale and e-commerce channels.

E-commerce Channel Weakness

E-commerce sales declined by 8% despite increased website traffic, indicating a disconnect between consumer interest and conversion.

Wholesale Segment Pressure

Wholesale net revenue was down 24% compared to last year, due to fewer doors and broad-based softness across partners.

Tariff Impact

The company is facing potential annual costs of approximately $10 million due to recent U.S. tariff charges, primarily affecting the textile side of the business.

Company Guidance

During the Purple Innovation First Quarter 2025 Earnings Call, the company reported revenue of $104.2 million, a 13% decline from the previous year, but in line with their guidance. Showroom sales grew by 7%, marking the fifth consecutive period of growth, while comparable sales were up 11%. Adjusted EBITDA increased by $8 million, improving by 650 basis points year-over-year. The company also achieved an adjusted gross margin exceeding 40% for the fourth consecutive quarter, with a 550 basis point improvement from the prior year. Looking ahead, Purple Innovation reaffirmed its full-year guidance with expected revenue between $465 million to $485 million and adjusted EBITDA ranging from flat to a $10 million increase. A significant development was the expansion of their partnership with Mattress Firm, anticipating more than $70 million in incremental net revenue beginning next year.

Purple Innovation Financial Statement Overview

Summary

Purple Innovation is experiencing serious financial challenges with declining revenues and negative profit margins. The balance sheet shows high leverage and minimal equity, raising sustainability concerns. Additionally, cash flow problems highlight the company's struggles to generate sufficient operational cash, indicating significant financial risks.

Income Statement

Negative

Purple Innovation has seen a decline in revenue over recent years, with the latest TTM revenue showing a significant drop from 2021 and 2022 levels. The gross profit margin for TTM is approximately 37.14%, which is a moderate level in the industry. However, the company is struggling with profitability, as indicated by negative net income and EBIT margins. These negative margins reflect ongoing challenges in cost management and revenue generation. The year-over-year revenue growth rate is negative, highlighting significant business challenges.

Balance Sheet

Negative

The company's balance sheet reveals high leverage, with a debt-to-equity ratio of approximately 5.08 in TTM, indicating a concerning level of debt relative to equity. The equity ratio is low at about 6.56%, pointing to a small equity buffer against liabilities. Furthermore, the return on equity is negative due to consistent net losses, suggesting challenges in generating returns for shareholders. The declining stockholders' equity over time underscores these financial pressures.

Cash Flow

Negative

Purple Innovation's cash flow statement highlights significant struggles with cash generation. The free cash flow is negative, and the free cash flow growth is also negative, indicating worsening cash generation capabilities. The operating cash flow to net income ratio is negative, reflecting difficulties in converting accounting profits into cash. Despite financing activities providing some cash inflow, the core business operations are not generating sufficient cash, posing a risk to financial stability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
487.88M	510.54M	575.69M	726.23M	648.47M
	Gross Profit
181.13M	171.82M	210.58M	294.97M	305.10M
	EBIT
-92.18M	-113.71M	122.13M	-19.33M	36.98M
	EBITDA
-45.17M	-94.13M	139.62M	18.94M	-257.85M
	Net Income Common Stockholders
-97.90M	-120.76M	-89.93M	3.11M	10.88M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
29.01M	26.86M	41.75M	91.62M	122.95M
	Total Assets
307.85M	390.63M	433.33M	642.47M	554.73M
	Total Debt
102.73M	152.97M	150.86M	182.32M	93.58M
	Net Debt
73.72M	126.12M	109.10M	90.71M	-29.37M
	Total Liabilities
287.64M	275.02M	254.44M	495.93M	394.48M
	Stockholders Equity
20.20M	115.42M	177.96M	145.77M	159.91M
Cash Flow		Free Cash Flow
-25.09M	-69.90M	-66.93M	-87.96M	42.12M
	Operating Cash Flow
-17.85M	-54.66M	-28.77M	-30.90M	81.26M
	Investing Cash Flow
-7.53M	-16.06M	-34.50M	-57.06M	-39.14M
	Financing Cash Flow
27.53M	55.83M	13.41M	56.62M	47.36M

Purple Innovation Technical Analysis

Technical Analysis Sentiment

Negative

Last Price0.78

Price Trends

50DMA

0.74

Positive

100DMA

0.84

Negative

200DMA

0.90

Negative

Market Momentum

MACD

0.01

Positive

RSI

48.90

Neutral

STOCH

26.30

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRPL, the sentiment is Negative. The current price of 0.78 is below the 20-day moving average (MA) of 0.83, above the 50-day MA of 0.74, and below the 200-day MA of 0.90, indicating a neutral trend. The MACD of 0.01 indicates Positive momentum. The RSI at 48.90 is Neutral, neither overbought nor oversold. The STOCH value of 26.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PRPL.

Purple Innovation Risk Analysis

Purple Innovation disclosed 41 risk factors in its most recent earnings report. Purple Innovation reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

The NOL Protective Charter Amendment and the NOL Rights Plan may potentially adversely affect the market for, and negatively impact the value of, our Common Stock. Q4, 2024

The NOL Protective Charter Amendment and the NOL Rights Plan may have an anti-takeover effect. Q4, 2024

We may not realize all the intended benefits of our Restructuring Plan and other cost-saving initiatives, which could adversely affect our results of operations and our financial condition. Q4, 2024

Purple Innovation Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	62 Neutral	$6.93B	11.25	2.95%	3.88%	2.69%	-24.71%
LIVE	59 Neutral	$61.07M	―	-6.89%	―	5.53%	15.64%
BSET	54 Neutral	$140.92M	―	-3.83%	4.94%	-11.78%	-13.89%
FFAI	49 Neutral	$118.12M	―	-186.28%	―	8.52%	98.75%
ISPO	49 Neutral	$50.07M	―	8.84%	―	-16.42%	88.30%
PRPL	47 Neutral	$86.76M	―	-199.78%	―	-10.41%	53.85%

* Consumer Cyclical Sector Average

Performance Comparison

PRPL

Purple Innovation

0.78

-0.39

-33.33%

BSET

Bassett Furniture

16.69

2.82

20.33%

LIVE

Live Ventures

16.25

-8.27

-33.73%

FFAI

Faraday Future Intelligent Electric

1.23

-20.53

-94.35%

ISPO

Inspirato

3.87

0.02

0.52%

Purple Innovation Corporate Events

Private Placements and FinancingBusiness Operations and Strategy

Purple Innovation Expands Credit Facility by $20 Million

Positive

May 6, 2025

On May 2, 2025, Purple Innovation entered into a Second Amendment to its credit agreement, increasing its senior secured term loan facility by $20 million, bringing the total to $100 million. This financial move aims to support Purple’s expansion and investments in innovation and advertising. Additionally, Purple announced a significant expansion of its commercial relationship with Somnigroup International, which will see Purple’s presence in Mattress Firm stores grow from 5,000 to 12,000 mattress slots. This expansion is expected to generate approximately $70 million in incremental net revenue starting in 2026. The strategic supply agreement with Tempur Sherwood, a subsidiary of Somnigroup, will allow Sherwood exclusive rights to assemble certain Purple product lines, while Purple retains its GelFlex Grid technology.

Business Operations and StrategyRegulatory Filings and Compliance

Purple Innovation Accelerates NOL Rights Plan Expiration

Neutral

May 6, 2025

On June 27, 2024, Purple Innovation‘s Board of Directors adopted a stockholder rights agreement, the NOL Rights Plan, to protect $238 million in net operating losses from potential tax limitations due to ownership changes. However, on May 6, 2025, the Board decided to accelerate the plan’s expiration to May 7, 2025, to prevent artificial suppression of share price and remove barriers to new investment, following a strategic review initiated in March 2025.

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures

Purple Innovation Explores Strategic Options Amid Financial Turnaround

Positive

Mar 13, 2025

On March 13, 2025, Purple Innovation announced a strategic review following expressions of interest, forming a special committee to explore options like a sale or merger. The company reported a return to positive adjusted EBITDA and cash flow in Q4 2024, despite a revenue decline, due to cost-saving initiatives and operational improvements. This financial turnaround supports their ‘Path to Premium’ strategy, with plans for continued investment in innovation and advertising.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.