Oura Pulls it’s IPO Last Minute, FICO’s Monopoly Comes Under Fire

Zaid Admani (0:00)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Tuesday, September 29th. In today's episode, we'll break down why many stocks in the S&P are making lows, despite the overall index sitting near record highs. We'll also tell you why Oura Ring just delayed their highly anticipated IPO just hours before they were supposed to go live. Then stick around to the end of the show to find out why minivans are making a comeback. We got a great show for you today.

Let's go.

Stocks started the week in the red. Yesterday, the S&P 500 fell 0.8%, which was its worst day in more than a month, while the Nasdaq dropped by 0.9% as oil and bond yields kept climbing. And by the way, the Dow Jones, which we haven't talked about, has had a rough month. It's now on track for its worst September in three years, but nobody cares about the Dow. So. All things considered though, I'd say the stock market is holding up pretty well, given the elevated oil prices and bond yields. Both the S&P and Nasdaq are near record highs. But there is something weird happening when you dig in a bit deeper in the indices. According to Goldman Sachs, about 45% of stocks in the S&P 500 have had a negative beta over the last three months. Basically, what that means is that really half the stocks in the S&P have been moving in the opposite direction of the overall market. Now, a big reason that this is happening is the concentration at the top. A handful of mega cap tech and AI companies have gotten so large that they have so much weight and influence on the S&P 500 that they can make the index look stronger even when a large chunk of the market isn't doing so hot. And that's because oil prices and bond yields keep climbing, which is a drag on many companies because it means higher input costs and borrowing costs for businesses. A 10 year treasury yield keeps going up. It jumped to 5.25% yesterday, which is a 19 year high. And the 30 year yield hit 5.57%, which is its highest since 2004 And oil is still hovering near $100 a barrel. Now there was some good news to report on that front. Saudi Arabia just got their East West pipeline back online. This pipeline lets Saudi Arabia move oil to the Red Sea to bypass the short of our moves. But it was damaged earlier this month by a drone strike. Before the attack, so this pipeline carried 4 million barrels a day, which is about 4% of the global oil supply. So this pipeline coming back online should help improve supply and hopefully bring down prices. And by the way, the other good news here is that negotiations are still happening between the US and Iran. So if that actually goes somewhere, we could get even more relief on oil prices. We'll continue to keep an eye on the oil market, bonds and stocks along with everything else happening. By the way, there are some interesting earnings happening this week as well. Micron reports on Wednesday and Nike reports on Thursday. And then of course, we had the Big Jobs report on Friday. We'll break all that down later in the week. So definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop.

Let's run through some headlines. Starting with Oura Ring. Oura was supposed to go public today, but at the last minute, the Smart Ring maker postponed their IPO, blaming uncertainty in the IPO market. Now, this is very strange for a company that pulled the plug like this last minute. Before we dive into that, a quick background on the company. Oura was founded back in 2013 They make those smart rings that you've probably seen some people wear that track things like sleep, heart rate, body temperature and activity. Now, these rings are pretty expensive. They cost like four to $500.

And then Oura also has a subscription service on top of that, which is like $70 a year, which gives you more detailed health data and AI powered insights. And look, these rings are popular. Business has been growing fast. Oura has 5.7 million paying subscribers and revenue for the first nine months of the year jumped 74% to $1.21 billion. The company said they also recently turned profitable as well. So given all that, the expectation for this IPO were pretty high. Oura was planning to raise around $2 billion and start trading on the NASDAQ this week at a valuation of about $13.5 billion. And that's why this whole market uncertainty explanation by the company is a little strange to me. I mean, the NASDAQ 100 literally hit a record high last week. Barron thinks the real reason that Oura delayed their IPO was because they were asking for too much money and existing shareholders were trying to cash out. One of the red flags about this IPO was that roughly three quarters of the shares being offered were coming from existing investors selling their stake rather than new shares raising money for the company itself. Oura itself was expected to net just $500 million from this IPO and almost all that money would have gone towards taxes related to employee stock options. So that means very little of the money being raised from this IPO was actually going towards the business. And I think it's possible that Oura's bankers got a sense that the stock could potentially tank on its first day of trading and the company decided to pull the plug last minute to avoid the optics. Now the company said the IPO is postponed and not canceled. Maybe the company will come back with a less aggressive valuation because at $13.5 billion, Oura would have been valued at more than eight times its sales. For context, that's the same valuation that Apple currently trades at today. So we'll have to see what Oura does. Personally though, I don't really understand the Oura hype. Like I'm all for tracking your health and sleep and all that stuff, but there are more and more companies like Apple working on their own screenless health devices. So I think it's gonna be hard for Oura to hang on to their customers. But then again, I'm not an Oura user myself. If you are someone that wears the Oura ring, let me know in the comments and how you like it. And if you would consider investing in this IPO.