It has been quite a tumultuous year for new listings on the market. While some of the most anticipated IPO & # 39; s – Uber Technologies Inc (NYSE:) and LYFT Inc (NASDAQ 🙂 – did not meet expectations, other little-known newcomers, such as Beyond Meat Inc (NASDAQ 🙂 and Zoom Technologies ] Inc (OTC :), became new darlings of investors.
In the past month, however, issuers have sent the clearest signal that the hunger for new listings is rapidly drying up, especially for companies that still have to make a profit.
Below we discuss three recent IPOs that have turned out to be some of the biggest flops of the year, and emphasize the uncertainty about the economy and markets that are pushing investors to the sidelines.
1. Peloton Interactive
New York-based Peloton Interactive Inc (NASDAQ: ), known for its high-end exercise bikes, is one of the names that did not impress investors in the public markets.
Peloton, which was able to raise more than $ 1.16 billion in its IPO on 25 September, trades nearly 15% lower than its stock price of $ 29 per share, making it one of the biggest flops of companies that have raised at least $ 1 billion in the last 10 years.
With more than 1.4 million members, Peloton has described itself as the & # 39; largest interactive fitness platform in the world & # 39 ;. It also has an app that sells its exercise programs to users who do not own any hardware but are willing to pay a monthly subscription for the lessons. The company is selling its basic subscription & # 39; connected fitness & # 39; for $ 39 a month and bikes from around $ 2,000.
Although the company has shown a good trajectory of increasing sales, it lost $ 196 million in sales from $ 915 million during the 12 months ended June 30 to submission. That compares with a $ 48 million loss on $ 435 million revenue in the same period a year earlier.
SmileDirectClub (NASDAQ :), the maker of bracket alternatives, raised $ 1.35 billion last month in the fourth largest IPO this year, but fate was no different from other major flops.
His share, traded at $ 13.21 on Monday, is more than 40% lower than his IPO price – a public market reception that surprised investors because the company's business model looks pretty attractive.
SmileDirectClub price chart
SmileDirectClub sends clear aligners directly to customers, the progress of which is monitored remotely by accredited dentists or orthodontists. Customers go to a so-called Smile Shop and receive a free 3D photo of their teeth or buy a package online to make an impression of their teeth and send it to SmileDirectClub. A dentist then evaluates the information and prescribes any aligners.
The company says the average treatment plan is around six months, considerably shorter than the 12 to 24 months that a traditional brace cycle would last. SmileDirectClub claims that the treatment costs less than 60% than a traditional orthodontic brace procedure.
SmileDirectClub achieved revenues of $ 423.2 million last year, an increase of 190% over the year before. But to generate that revenue, it had to spend a lot, with marketing and sales costs that more than tripled to $ 213.1 million in 2018 from $ 64.2 million in 2017. These costs more than doubled their losses to around $ 75 million in 2018 from about $ 33 million a year ago.
New York-based WeWork (1945), (1945) NYSE :), which rents and owns spaces in office buildings and then rents out offices to clients ranging from startups to companies, yesterday officially withdrew its IPO bid after it had not generated the support needed to mention the company.
The path to a listed company was so tumultuous for WeWork that it cost his co-founder Adam Neumann and chief executive officer his resignation: he resigned last week after the board expressed concern about corporate governance and the aggressive growth of the company. money-losing startup.
The WeWork public market debacle also shows a big difference in how investors value a company that has received huge support from private investors. For example, WeWork has raised more than $ 12 billion since it was founded nine years ago, but has never made a profit.
According to media reports, the company had focused on a stock sale of around $ 3.5 billion in September, but the prospectus could not present a case where investors could see a clear path to profitability.