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Suck it upper-middle-class white people … or what Peloton refers to as “core demographic.” Peloton, the bougie stationary bike maker, IPO-ed yesterday. And it did not go well.
Cue the bloodbath
The newly minted shares fell 11% on the day. That makes it the third-worst trading debut in a decade for US companies that have raised at least three commas. New personal record!
Still, the company managed to raise $1.6B at a $7.2B valuation.
What went wrong?
It isn’t entirely surprising considering the “success” of its unicorn peers that also burn money like Heath Ledger as the Joker. I see you, Uber, Lyft, Chewy, and SmileDirectlub.
The “connected fitness company” (pretty sure that’s made up) managed to lose $196M on $915M in revenue during the 12 months ended June 30. So, a lot. Skeptics also fear that Peloton’s growth at all costs strategy could face headwinds outside of the US. Plus investors can’t decide whether the company is a fitness platform or hardware company.
The bottom line …
PTON’s CFO said it best yesterday “there’s always been different periods of time when people focus on growth and when people focus on profitability.” Welp, Jill, it looks like the tribe has spoken and they’re saying “show me the money.”
PULL OUT GAME STRONG
Endeavor pulled the plug on its IPO just one day prior to going public.
This “isn’t the first time,” as the sports and content company has left the dance to clean its pants before. It had already postponed its IPO plans earlier this year.
On the eve of going public, the Prestige Worldwide competitor scaled back its offering via an SEC filing, dropping its debut share price from a $30 to $32 per share range to $26 to $29, before ultimately just saying f*ck it.
Endeavor cited weak stock market demand as the reason for pulling the plug, but Peloton’s disastrous IPO appears to be the straw that broke the Hollywood camel’s back.
Look back at it
Endeavor wasn’t always the talent and sports giant that it is today. Way back in 2013 it was just a film and TV talent agency (“Lllllooooyddd!”). That is before it paid $2.4B for IMG Worldwide. That kicked off a shopping spree for the company. As it marched toward an IPO, Endeavor gobbled up the Miss Universe pageant from Donny Politics in 2015 and acquired UFC for $4B in 2016.
The bottom line …
While companies going public have raised the most this year since 2014 ($52.7B YTD) investors view companies as overvalued and have been turned off by the unicorns’ bottom lines (looking at you Uber and Lyft).
IN OTHER NEWS
- Interactive Brokers, the big swinging dick of the brokerage and clearing world, announced that it will begin offering commission-free stock trades. The new product, IBKR Lite, will offer free trades on any amount for US exchange-listed stocks and Exchange Traded Funds. Additionally, there will be no account minimums, inactivity fees, and customers will still get free market data. Hear that? It’s the sound of TD Ameritrade, ETrade, and Charles Schwab collectively sh*tting their pants. All three companies’ stocks dropped on the news.
- Cancel the delivery. Security breaches and tech companies go together like lamb and tuna fish. DoorDash announced that a data breach has impacted 4.9M users of its app. Personal information of its merchants, customers, and delivery workers has been compromised, including driver’s license information of 100k of its drivers. The breach was limited to users who signed up before April 5, 2018. Why didn’t we install those McAfee updates sooner?
- Like any bad break up, WeWork wants nothing to do with its ex. As the company moves to cut headcount, it’s also sending more than 20 of ex-CEO Adam Neumann’s friends and family packing. In total, WeWork is expected to cut thousands of employees, while also dumping subsidiaries that fall into the non-office space rental category. Oh, and the company has put its, er, Adam Neumann’s jet up for sale for $60M. The firm is looking to cut the fat before it gives an IPO another go. There’s no telling how many drunk phone calls Masayoshi Son has gotten from Adam Neumann.
- Wells Fargo’s interim CEO Allen Parker is about to receive the ultimate participation trophy. The acting chief could become the permanent CEO … only because Wells can’t find anyone that wants his job. Analysts blame low pay, regulatory pressure, and location, location, location as the reason no one will take the role off of Wells’ hands. The role has been empty since March.
- Tesla had a great day, with stocks jumping more than 5% after Elon Musk sent an email to employees indicating that the company could hit 100k car deliveries this quarter. At least he didn’t do it on Twitter. Musk also said that the key to hitting his goal is “rallying as much as [sic] our company resources as possible” to hit that number. For the record, Tesla only shipped 95K vehicles last quarter.
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