Sleep Number Corp. (NASDAQ:SNBR) saw its stock crater in after-hours trade Wednesday, sliding 61.5% after media reports indicated the company is preparing for a potential bankruptcy filing as a means to address its mounting debt load.
According to one report, the mattress retailer has reached out to lenders about fresh financing that could be structured as a bankruptcy loan. Another report earlier indicated the company was preparing to file for Chapter 11.
The company has reported weakening top-line performance alongside an elevated leverage profile. In March, Sleep Number disclosed 2025 revenue of $1.4 billion, a decline of 16% compared with the prior year. Management has cited a combination of industry pressures, reduced store traffic and the effect of tariffs as headwinds to the business.
At today’s close, Sleep Number’s share price had dropped to $1.07 per share, reflecting an almost 90% decline over the past year. Earlier coverage in April noted the company had sought rescue financing, including a loan of about $50 million intended to help avoid bankruptcy. A regulatory filing showed approximately $606 million of outstanding borrowings at the beginning of April.
Sleep Number is known in the market for beds that allow users to adjust firmness settings, a product distinction the company has used to differentiate itself amid a crowded mattress sector.
Market context and immediate implications
The equity market reaction - a steep after-hours drop - signals investor concern about the firm’s ability to navigate its debt and sales pressures without restructuring. The reported pursuit of financing that could be used within a bankruptcy framework indicates lenders and the company are exploring options that would prioritize addressing the balance sheet through court-supervised processes if needed.
For stakeholders, the situation brings near-term uncertainty for creditors, suppliers and franchise or store partners tied to Sleep Number locations. The reported $606 million of borrowings and prior attempts to secure roughly $50 million in rescue financing underscore the narrow margin for error for the company’s liquidity profile.
What is known and what remains uncertain
- The company has formally disclosed 2025 revenue of $1.4 billion, down 16% from the prior year.
- Reports indicate Sleep Number has sought financing that could be structured as a bankruptcy loan and that it approached lenders for new financing.
- Regulatory filings show about $606 million in outstanding borrowings at the beginning of April; earlier reporting said the company sought roughly $50 million in rescue financing.
Details remain limited regarding the terms of any financing discussions, the willingness of lenders to provide bankruptcy-structured loans, and how a Chapter 11 filing - if it occurs - would be sequenced or resolved.