TPX - Sleep Number: A Contrarian Short You Can't Afford To Snooze
Thesis Overview
Our analysis indicates Sleep Number (SNBR) is 46.4% overvalued, with a fair value of $26.17/share relative to the current share price of $48.88. We believe Sleep Number is overvalued for three main reasons.
Firstly, our detailed TAM analysis indicates the saturation of Sleep Number's footprint in the United States. The sell-side extrapolates the success of recent store openings into the future without considering when Sleep Number fulfills its U.S. store opportunity. Our estimate of TAM also accounts for the explosion of retail stores from competitors Tempur Sealy (TPX), Purple (PRPL), and Casper.
Secondly,