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Sleep Number
(OTC:SNBRQ)
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Rating:39Underperform
Price Target:
$0.02
▼(-20.00% Downside)
Action:Downgraded
Date:08/03/26
The score is driven primarily by severely weakened financial performance (declining revenue, losses, negative cash flow, and negative equity) and an extremely negative corporate event outcome indicating shareholders are not expected to recover value. Technicals reinforce the downside risk with the price far below major moving averages, while earnings-call operational improvements are insufficient to offset the capital-structure and equity impairment risks.
Positive Factors
High gross margins
Sustained gross margins around 58–60% indicate durable product-level economics and pricing power in the smart-bed category. This margin buffer helps absorb promotional activity and supports unit profitability as volumes recover, improving the odds of long-term operating leverage.
Negative Factors
Chapter 11 asset sale wiping out equity
A court-approved asset sale that cancels existing common stock is a structural equity impairment: shareholders are expected to receive no recovery, extinguishing long-term equity claims and removing upside for current holders regardless of future operational improvements.
Read all positive and negative factors
Positive Factors
Negative Factors
High gross margins
Sustained gross margins around 58–60% indicate durable product-level economics and pricing power in the smart-bed category. This margin buffer helps absorb promotional activity and supports unit profitability as volumes recover, improving the odds of long-term operating leverage.
Read all positive factors
Sleep Number (SNBRQ) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$283.50K
Dividend YieldN/A
Average Volume (3M)702.55K
Price to Earnings (P/E)―
Beta (1Y)4.37
Revenue Growth-16.69%
EPS Growth-698.31%
CountryUS
Employees3,114
SectorConsumer Cyclical
Sector Strength84
IndustryFurnishings, Fixtures & Appliances
Share Statistics
EPS (TTM)-7.57
Shares Outstanding23,049,000
10 Day Avg. Volume1,142,307
30 Day Avg. Volume702,550
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)-0.34
Price to Sales (P/S)0.14
P/FCF Ratio-11.12
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda>-0.01
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)-0.99
Revenue Forecast (FY)$1.38B
Sleep Number Business Overview & Revenue Model
Company Description
Sleep Number Corporation, together with its subsidiaries, designs, manufactures, markets, distributes, retails, and services sleep solutions in the United States. It offers smart beds and adjustable bases, pillows, sheets, and other bedding produc...
How the Company Makes Money
Sleep Number primarily makes money by selling products directly to consumers, with revenue largely driven by smart bed systems (its core Sleep Number branded beds) and associated components. A meaningful portion of sales also comes from complement...
Sleep Number Earnings Call Summary
Earnings Call Date:May 12, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Neutral
The call presented a mix of encouraging operational progress and meaningful near-term financial stress. Highlights include a successful and fast product reset with strong early consumer metrics (NPS gains, ARU improvement, lower returns), improving March and April demand trends, e-commerce growth, sizeable cost-savings execution, and short-term lender support that provided $55 million of incremental liquidity. Offsetting these positives are significant YoY revenue decline (-19%), margin compression (~329 bps YoY), negative free cash flow for the quarter, a short-term $25 million term loan maturing June 30, 2026 that requires a recapitalization, and continued reliance on discounts to clear legacy inventory. Overall the company shows tangible operational momentum but remains exposed to capital-structure and cash-flow risk until a longer-term financing solution is secured.Positive Updates
Product Reset and Strong Early Product Metrics
Completed a full product reset across all stores in <4 weeks; stores with the new lineup showed 12% higher ARU versus stores with legacy products. ComfortMode (launched Jan, broad rollout Mar 23) drove +15 point improvement in overall NPS and +27 points versus prior entry-level C series; ComfortMode has ~100 bps lower return rate versus the historical product it replaces.
Negative Updates
Significant YoY Revenue Decline
Q1 net sales declined 19% year-over-year (reported $319 million), reflecting weak January/early-February demand due to weather and macro conditions and reduced media investment (-21% investment in Q1 vs prior year).
Read all updates
Q1-2026 Updates
Positive
Negative
Product Reset and Strong Early Product Metrics
Completed a full product reset across all stores in <4 weeks; stores with the new lineup showed 12% higher ARU versus stores with legacy products. ComfortMode (launched Jan, broad rollout Mar 23) drove +15 point improvement in overall NPS and +27 points versus prior entry-level C series; ComfortMode has ~100 bps lower return rate versus the historical product it replaces.
Read all positive updates
Company Guidance
Guidance for Q2 is cautious: the company expects net sales to be down low single digits to flat year‑over‑year, with media investment roughly flat to Q1 but meaningfully higher than last year, and April demand running in line with internal expectations (March demand improved ~6% YoY, the first YoY demand growth in two years). Key metrics underpinning the outlook include Q1 net sales of $319M (‑19% YoY), adjusted EBITDA ~$5.8M, gross margin 57.9% (‑329 bps YoY, with discounting accounting for <100 bps of the decline), adjusted operating expenses $195M (down $42M, ‑18% YoY), Q1 free cash flow use $13.2M (≈$20M favorable to plan, $6M unfavorable vs prior year), ARU ~$6,021 (stores reset with new lineup showed ~12% higher ARU), end‑of‑Q1 liquidity ~$40M with lender amendment adding ~ $55M incremental relief including a $25M term loan due 6/30/2026 and temporary relief from a $30M minimum liquidity covenant through 6/30/26. Product and marketing signals that support the guidance: ComfortMode NPS +15 pts overall (+27 vs prior entry‑level), a ~100 bps lower return rate for ComfortMode, ComfortNext Lux selling at ~ $4,000, e‑commerce demand +5% YoY in April, AI citations +25% YTD, and cost actions identifying >$235M of annualized savings with $200M executed (and a $50M plan ~30% executed YTD); management declined to provide further financial guidance while it pursues strategic and financing options with advisors.Sleep Number Financial Statement Overview
Summary
Income Statement
24
Negative
Balance Sheet
18
Very Negative
Cash Flow
22
Negative
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Sleep Number Technical Analysis
Negative
0.02
Price Trends
0.16
Negative
1.13
Negative
4.24
Negative
Market Momentum
-0.06
Negative
27.27
Positive
21.53
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNBRQ, the sentiment is Negative. The current price of 0.02 is below the 20-day moving average (MA) of 0.02, below the 50-day MA of 0.16, and below the 200-day MA of 4.24, indicating a bearish trend. The MACD of -0.06 indicates Negative momentum. The RSI at 27.27 is Positive, neither overbought nor oversold. The STOCH value of 21.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SNBRQ.
Sleep Number Risk Analysis
Sleep Number disclosed 2 risk factors in its most recent earnings report. Sleep Number reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sleep Number Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $1.64B | 16.76 | 9.83% | 2.38% | 0.83% | 4.17% | |
69 Neutral | $575.09M | 14.68 | 8.40% | 7.93% | -5.72% | ― | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
56 Neutral | $1.64B | 17.98 | 6.94% | 3.40% | 4.68% | ― | |
56 Neutral | $1.29B | 6.14 | 21.32% | 1.79% | -8.20% | 53.01% | |
48 Neutral | $28.43M | -0.59 | 189.80% | ― | -0.74% | 42.52% | |
39 Underperform | $283.50K | -0.02 | 31.47% | ― | -16.69% | -698.31% |
* Consumer Cyclical Sector Average
SNBRQ
Sleep Number
0.02
-10.66
-99.82%
ETD
Ethan Allen
22.90
-4.55
-16.56%
MLKN
MillerKnoll
23.73
3.09
14.97%
LZB
La-Z-Boy Incorporated
41.72
4.09
10.86%
LEG
Leggett & Platt
9.70
0.53
5.75%
PRPL
Purple Innovation
6.60
-19.40
-74.62%
Sleep Number Corporate Events
Business Operations and StrategyLegal ProceedingsM&A Transactions
Sleep Number Completes Asset Sale, Shareholders Wiped Out
Negative
Aug 3, 2026
Sleep Number Corporation and its subsidiaries, which filed for Chapter 11 bankruptcy protection on June 12, 2026 in the Southern District of New York, have completed the court-approved sale of substantially all of the company’s assets to SNB...
Legal ProceedingsM&A Transactions
Sleep Number Amends Bankruptcy Asset Sale Agreement
Neutral
Jul 23, 2026
On June 12, 2026, Sleep Number entered into a stalking horse asset purchase agreement with SNBR, Inc., a subsidiary of Sleep Country Canada, to sell substantially all of its assets for $415 million in cash plus the assumption of certain liabilitie...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.