In the recent past companies coming to market wore their losses as a badge of pride. They were a sign of ambition, scale and speed of growth. Now the public market has seen through that.
The planned initial public offerings of WeWork, the office rental company, entertainment group Endeavor and fitness equipment maker Peloton were a test of investor appetite for lossmaking companies that burn through cash to grow. WeWork’s plans collapsed after investors sounded the alarm not just over the group’s increasing losses, but its complex corporate structure and the influence of founder Adam Neumann. The company was valued at $47bn at its most recent private funding round — more than ten times the £3.6bn market value of IWG, its profitable London-listed rival.
Peloton, whose business is based on stationary exercise bikes with screens that broadcast live workouts but which sold itself as the next technology stock, succeeded. Its shares, however, closed more than 11 per cent lower on their first day of trading last week. It holds the dubious honour of the third-worst opening among companies valued above $1bn. Endeavor pulled its own offering after a lukewarm reception from prospective backers.