Is it Time to Buy the Dip on PRPL Following C-Level Resignation?

Purple Innovation stock is down over 40% from its peak

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Purple Innovation Inc (NASDAQ:PRPL) is an American comfort technology company. PRPL designs and manufactures a variety of branded comfort products, including mattresses, pillows, seat and back cushions, frames, sheets, and more. The tech company’s products are a result of its investment in proprietary and patented comfort technologies, such as the Hyper-Elastic Polymer gel, and the development of its own manufacturing processes. Purple Innovation markets and sells its products through direct-to-consumer online channels, traditional retail partners, third-party online retailers, and retail showrooms.

Last month, Purple Innovation announced that Chief Financial Officer, Craig Phillips, and the company have parted ways, which took effect  Tuesday, Aug. 31. PRPL then appointed Bennett Nussbaum to serve as interim Chief Financial Officer. Nussbaum is a global financial executive and senior adviser with over 45 years of experience including roles as Chief Financial Officer at Pepsi-Cola International, Burger King, and FedEx Office.

PRPL has outperformed Wall Street's earnings expectations on just one of its last four quarterly earnings reports. For Q2 of 2020, Purple Innovation missed analyst estimates by a margin of $0.30, reporting an EPS of -$0.11. For Q3 of 2020, the company's EPS increased to $0.07, still missing expectations by a margin of $0.17. For Q4 of 2020, PRPL posted a decrease in earnings, dropping to -$0.03 per share and missing estimates by a margin of $0.14. For Q1 of 2021, Purple Innovation reported an EPS of $0.17 and beat expectations by a margin of $0.03

Purple stock has increased approximately 26% in price year-over-year, However, shares have decreased 28% year-to-date and Purple stock is currently down 43% after a record high of $41.08, touched in mid-February.

Moreover, Purple Innovation stock has a promising price-sales ratio of 2.18, also displaying strong growth in recent years. PRPL's trailing 12-month revenues are up 13% since fiscal 2020 and have increased 155% since fiscal 2018. Additionally, the comfort tech company has increased its net income by almost $100 million since fiscal 2020, going from $3.8 million to $103.6 million. Purple Innovation also carries a solid balance sheet with $122 million in cash and $95 million in total debt. Overall, Purple Innovation's fast paced growth makes it an intriguing speculative play, as the company begins to turn a profit.


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