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(Bloomberg) -- Peloton Interactive Inc. fell as much as 15% in its stock market debut Thursday, becoming the latest in a long list of unprofitable tech-oriented start-ups to flop with public investors.
The New York-based company, known for its high-end exercise bikes, joined highly anticipated listings from Uber Technologies Inc., Lyft Inc. and SmileDirectClub Inc. that failed to pop on the first day of trading for shareholders who bought in at the IPO price.
The founder-led company was still able to raise more than $1.16 billion in its IPO, though. But the poor reception -- along with the recent disintegration of WeWork’s offering -- has spooked at least one other IPO candidate.
Hollywood entertainment company Endeavor Group Holdings Inc. pulled its IPO Thursday, after cutting the size and price of the offering. It decided to delay the IPO after monitoring the rocky performance of Peloton, people familiar with the matter said.
Peloton’s shares opened at $27 and closed down 11% from their offering price to $25.76 in New York trading, giving the company a value of $7.2 billion. The fitness startup sold 40 million shares for $29 each on Wednesday, after marketing them for $26 to $29.
It marks the third-worst trading debut in 10 years in the U.S. for companies that have raised at least $1 billion, according to data compiled by Bloomberg.
Peloton Chief Executive Officer John Foley said in an interview with Bloomberg Television that he had “some disappointment” about the reception but was confident in his company’s prospects.
“It’s an interesting time in the markets,” Foley said. “There is anxiety. The markets are on edge.”
The IPO makes the company fully funded and will help it focus on adding subscribers in the coming years, he said.
Warning Sign
Peloton and WeWork haven’t been the only warning signs for IPO investors.
While most of the 11 other companies that have gone public this month priced within or above their marketed range, the largest of them, SmileDirectClub Inc., is trading about 44% below its offer price in its $1.35 billion listing.
Peloton -- like some others that have sagged since their debut -- has a dual-class share structure that gives top owners including its founder 20 votes for each share they own. Public investors only get one vote per share.
Peloton’s debut also raises questions about investment banks that have touted high valuations to founders of startups that don’t stand up once investors get a look under the hood.
“The risk is when you get valuations bid up to a point that is unworkable for the public markets,” said Howard Mason, a bank analyst at Renaissance Macro Research.