Purple Innovation (PRPL) Stock Forecast & Price Target

Purple Innovation Inc has experienced an encouraging upward trajectory in both direct-to-consumer (DTC) and wholesale revenue, attributed to the successful launch of its new Premium and Luxe collections. The company’s wholesale revenue grew by 2.6% sequentially and 3% year-over-year, reflecting strong performance across various sales channels, including an increase in showroom revenue and the effective rollout of new products. Notably, management’s emphasis on improved sales and the potential for expanding retail partnerships indicates a robust growth outlook fueled by positive consumer response and effective product strategy.

Purple Innovation Inc. faces significant financial challenges as evidenced by a considerable decline in gross margins, which fell from 41.5% in 3Q22 to 33.8% in 3Q23, largely due to discounts and costs related to product transitions. The company's management has lowered its 2023 revenue guidance to $510M-$520M, reflecting a year-over-year decline of 9.7% to 11.4%, and expects an adjusted EBITDA loss of $65M to $55M, indicating continued operational weakness. Furthermore, adjusted operating margins have worsened dramatically, decreasing by 2,110 basis points to -16.2%, highlighting increased marketing and general administrative expenses as a percentage of sales.