Another big IPO lands with a thud
EDITOR'S NOTE
Well, it certainly could have been worse.
Peloton--the fancy home-cycling subscription company--priced its IPO last night at the top end of its expected range, at $29 a share.
Normally, that would be a pretty bullish sign for the way an IPO would start trading the next day. It means strong demand, a potential pop at the open, etc. It's what we saw happening a lot with the earlier IPOs this year.
But the IPO party has been fizzling out. Nearly half (57) of this year's 120 new offerings are trading below their filing price. And 75% of them were trading lower this week heading into Peloton's debut today. Some of the worst performers since Monday: SmileDirectClub, down 20%. Slack, down 12%. Lyft down 11% to a new low today. Pinterest even down 10%!
Against that backdrop, for Peloton to only open $2 below where it priced last night isn't as bad as it could have been. In fact, the indications all morning were worse, in the mid-to-low 20s. "Valuation Dean" Aswath Damodoran had said it's only worth $19 a share. Duncan Davidson of Bullpen Capital, who we'll be speaking to at the top of the show, says he'd only pay $14 for it.
All told, Peloton opened just before noon at $27 and is currently fluctuating between $27-28 a share. Its underwriters are probably breathing a sigh of relief--for now. J.P. Morgan especially, who, as we discussed yesterday, is reeling from its big bet on WeWork.
And by the way, its $9.6 billion fully diluted valuation at the IPO price of $29 is actually the largest ever for a New York-based startup, per Renaissance Capital and Axios.
More at 1 p.m.! Including on Endeavor's IPO pricing, which is also looking disappointing. I hope it's not me (I'm one of their clients)!
See you then,
Kelly
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