Hey Snackers,
We crafted today's Snacks from Nasdaq, where Peloton was busy IPO'ing.
So we sat down with the co-founder for our podcast to chat about his original pitch to investors and why the ticker symbol is "PTON" (huge missed opportunity — should've considered "SWET" or "BIKE")
Ever get false advertising vibes?... Or think those spend-the-rest-of-our-lives-together messages were from fake people? The FTC might be down to take your case. This week, the FTC announced a lawsuit against Match Group, the owner of Tinder, for misleading millions of potential daters with faux-mance.
Here's how the scheme went down... Match teased singles with fake messages from fake people in order to get them to join Match.com for real.
Fake ads aren't cool, and this is a bad look... We feel bad for the duped victims, despite their deficient fakeness radars. Match stock fell 7% on Wednesday on this news. Rivals Bumble and Facebook Dating could win some hearts.
They're supposed to be celebratory... IPOs feel like graduation or getting your Instagram account verified. But 2019 — the year of the tech IPO — has been the opposite. Talent agency Endeavor just canceled its IPO less than 24 hours before it was supposed to happen. This is the entertainment company that repped Denzel and owns half of Ultimate Fighting Championship.
There are fewer rainbows out there for unicorns lately... That's why Endeavor dipped out. The share price that a company IPOs at matters to its existing investors — they own stock in the private company and want to eventually sell once it becomces public. Here's what's happened to stocks lately once they IPO:
Private markets were hype, public markets are reality... In 2017, SoftBank scrapped together $100B from insanely wealthy people, companies, and countries to invest huge sums in startups. The venture capital firm gave Uber, WeWork, and Slack gigantic checks to fund their growth, also driving their valuations up. But Wall Street's been more skeptical, slashing those valuations by hammering their stock prices. Now unicorns might wait to IPO until their chests grow profit hairs.
Take a recovery day... Peloton shares fell 11% after they began trading on IPO day. The interactive fitness platform likes to "sell happiness" — but it mainly streams spin classes to 1.4M able-bodied humans averaging 12 rides/month. That large engaged audience attracts top spin instructors who bump Rihanna to get you up the hill in 3rd position. Here's how it makes money:
"We're 6 or 7 companies in one"... CEO John Foley's words, not ours. Peloton stretches itself out to include multiple industries, and it's proud of that. But business model hybridization makes it harder for investors to understand what they're buying:
So was the Peloton IPO a success?... Yes for the company, no for investors who bought shares yesterday. Even though the stock price dropped, IPOs aren't only about the trading of new shares. They're used to raise a new round of funding for the company — and Peloton pocketed over $1B from the new shares it issued, more than it first expected. (Listen to our pod for a lot more).
Disclosure: Authors of this Snacks own shares of Tesla, Beyond Meat, and Luckin Coffee
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