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Peloton Dives 11% in First Day of Trading But Gurus Bought Dud IPOs

Shares of Peloton, an electronic exercise bike maker with no earnings, tumbled 11% in their first day of public trading. The company followed in the footsteps of Uber in an otherwise buoyant year for initial public offerings, but investors GuruFocus tracks still bought some of the duds in the recent filing quarter.

Peloton Interactive Inc. (NASDAQ:PTON) opened at $27, $2 below their IPO price of $29, before falling to $25.76 by day's end. The price valued the company at $8.1 billion, making it one of the more sizable of the bevy of tech IPOs of 2019.


Like many of the fresh offerings, Peloton's valuation was not built on its current ability to turn a profit. The company reported a net loss of $195.6 million in 2019, following a $47.9 million loss in 2019 and $71.1 million in 2017.

Prominent investors will reveal whether they bought Peloton at its IPO or in its slump afterward in third and fourth-quarter filings. Chase Coleman (Trades, Portfolio)'s Tiger Global Management, however, owned at least a 19.8% stake in the company, according to IPO filings.

Another company that faltered on its first day, Uber, lost 7.6% at its IPO in May, when the ridesharing company was valued at $82.4 billion. It has also tumbled 23.79% since its debut.

For the second quarter, it again failed to generate a profit, reporting $5.49 billion in net losses, compared to $739 million a year earlier.

Despite the state of the company's financials, eight prominent investors reported owning the stock at the end of the second quarter. Andreas Halvorsen (Trades, Portfolio) held the largest position, with 13.4 billion shares worth 2.78% of his equity portfolio at Viking Global Investors. Tech investor Philippe Laffont (Trades, Portfolio) held 10.5 billion shares, consuming 4.1% of his equity portfolio. Chase Coleman (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio) were among other investors revealing that they owned Uber shares.

Another celebrated IPO, of Uber rival Lyft (NASDAQ:LYFT), gained 9% in its first trading day in March, a tepid start compared to some of its peers. Yet the stock slid 46.6% since then, closing at $41.90 per share Thursday.

Seven investors retained the company's shares by the end of the second quarter, which was the second reporting period since Lyft's debut. Amid the downturn, three increased their stakes in the company: Primecap Management, Ron Baron (Trades, Portfolio) and David Carlson (Trades, Portfolio). George Soros (Trades, Portfolio) held a small position of 200,000 shares, while John Paulson (Trades, Portfolio) kept his 2.5 million share count unchanged.

Meanwhile, Paul Tudor Jones (Trades, Portfolio) slashed his Lyft position by 92.09%, and Steven Cohen (Trades, Portfolio) trimmed his by 27.7%.

Several higher fliers saw less buying. For instance, Pinterest (NYSE:PINS), which soared 28.6% on its first day and is up 11% since its debut, had only four holders: Daniel Loeb (Trades, Portfolio), Primecap Management, Steven Cohen (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio). Beyond Meant (NASDAQ:BYND), one of the biggest winners with a 163% gain on its first day in May and 110% rise since its start, has only two investors. Joel Greenblatt (Trades, Portfolio) held 10,593 shares, and Steven Cohen (Trades, Portfolio) owned 7,100.
This article first appeared on GuruFocus.