27 Sep

Peloton IPO: Another Unicorn Debut Bites the Dust

WRITTEN BY Mike Sonnenberg

These days, loss-making and aggressively valued unicorns seem to be out of fashion. The ones going public or planning to are under tremendous scrutiny from analysts and markets. Peloton’s IPO, which happened on September 26, served to confirm that fact.

Peloton stock, which lost 8.9% yesterday on its public debut, was trading 4% lower today at $24.73 as of 10:36 AM ET. The company priced its shares at $29 but opened lower at $27 yesterday. The connected bike and treadmill maker raised $1.3 billion in the IPO. The company is not expected to be profitable until 2023.

Right after Peloton’s IPO, Hollywood agency Endeavor shelved its IPO plans for the second time this year.

Peloton IPO

Peloton IPO hit the market just days after WeWork shelved its IPO due to lackluster investor demand. This week, WeWork CEO Adam Neumann resigned due to mounting pressure from investors. WeWork was last valued at $47 billion in January, but there are murmurs that it could go public with a price tag of $10 billion. Softbank Vision Fund (SFTBY), which has poured over $12 billion into WeWork and holds a 29% stake in the startup, could end up being the biggest loser if WeWork goes public at a $10 billion valuation.

However, the downfall of unicorns truly started with Uber’s (UBER) IPO in May. Uber, which settled on $45 per share for its IPO, lost 7.6% on day one, making its IPO the worst in the history of the US stock market in dollar terms. Today, Uber stock was trading 1% down at $31.25, over 30% below its IPO price. Interestingly, Uber is also a Softbank Vision Fund portfolio company. Softbank reported unrealized losses in the previous quarter largely due to Uber’s flop IPO.

Reversal of fortune

Not all unicorns made a public debut as underperformers. Lyft (LYFT) went public in March at a price of $72 but started trading 23% up at over $87. The stock ended up 8.7% above its IPO price at $78.29. However, LYFT started crashing soon after its debut day. As of 11:28 AM ET today, Lyft stock was trading at $41.9, over 40% below its IPO price. However, some analysts are still bullish on Lyft and Uber.

However, Slack (WORK) presents us the most interesting case of a unicorn going public. The company went public solo, ditching bankers who act as underwriters. Despite not having bankers to support it, Slack stock opened 48% higher than the reference price set by the NYSE. While Slack stock largely maintained its luster in June, it has lost over 40% since the beginning of July.

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