Do you hear that sound? Like air escaping a balloon?
You are experiencing the slow decline of another market bubble. This time, the bubble is filled with “unicorns” trying to come into the public markets after years of being nursed on cheap and easy venture capital.
Public investors are no pushovers — they require a real path to profitability to get interested. They’re unlike venture capital investors who just need to pass their stake onto the next idiot.
WeWork is probably the poster child of this cycle (like Pets.com and Miami Condos the last two times around). The company behind shared office spaces is backed by SoftBank’s (OTCMKTS:SFTBF) Masayoshi Son. WeWork CEO Adam Neumann has quit, his orbiters are on the way out and WeWork’s proposed IPO looks to be on ice.
But many other familiar names have gone public and are failing miserably. Here are five fumbling IPOs.
Fumbling IPOs: Peloton (PTON)
The idea behind Peloton (NASDAQ:PTON) can probably be traced back to a Bell Laboratories white paper from the late 1990s describing a “Peloton Bicycling Simulator” that was a proto-Peloton machine. The prototype combined a bike, a computer monitor and internet connectivity. What’s old is new again. Unfortunately, Peloton’s $29-a-share IPO isn’t holding, with shares falling below $26 today as investors flee.
The story is that the company claims it invented something new by combining exercise hardware with custom content. But the content enjoys no economic moat — competitors will be keen to dive in at a lower cost. Amazon (NASDAQ:AMZN) fitness anyone?
Uber (UBER)
Shares of Uber (NYSE:UBER) are falling to fresh post-IPO lows, cutting below the bottom set earlier this month. The company will next report results on Nov. 7 after the close. Analysts are looking for a loss of 83 cents per share on revenues of $3.7 billion.
CEO Dara Khosrowshahi recently told CNBC that he would be disappointed if the company isn’t profitable in three or four years.
That’s a long time to wait with a new recession seemingly around the corner.
Lyft (LYFT)
Uber’s archnemesis Lyft (NASDAQ:LYFT) is also suffering a nasty share price decline, falling to a new post-IPO low as profitability remains fleeting and competition intense. Promises of self-driving cars or even human-carrying drones seem like far-fetched wishes when in the here and now, cash is burning. The company will next report results on Nov. 7 after the close. Analysts are looking for a loss of $1.67 per share on revenues of $912 million.
Slack (WORK)
On-the-job instant messaging service Slack (NYSE:WORK) continues to see its share price go nowhere but down, falling from a high of $42 set on the day of its debut to a low of $21.25 Sept. 27 — a loss of nearly 50%. The company will next report results on Dec. 3 after the close. Analysts are looking for a loss of 8 cents per share on revenues of $156 million.
Analysts at Mizuho recently initiated coverage of the company with a “neutral” rating.
Zoom Video Communications (ZM)
Virtual meeting services provider Zoom Video Communications (NASDAQ:ZM) is watching its share price fall out of its month-long consolidation range testing the lows set back in May and June. Watch for a decline back to post-IPO low near $35, which would be worth a decline of more than 50% from here. The company will next report results on Dec. 5 after the close. Analysts are looking for earnings of 3 cents per share on revenues of $156 million.
As of this writing, William Roth did not hold any of the aforementioned securities.
