Why Oura delayed its IPO
Oura, the smart ring maker, cited “uncertainty” as its reason for delaying its much-anticipated public offering.
On September 29, Oura CEO Tom Hale announced a delay to the company's long-awaited IPO, citing "uncertainty in the IPO market." The reason behind this last-minute reversal is multifaceted and stems from concerns over valuation, financial structure, and competition within the tech hardware space.
According to Morgan Chittum, a newly joined Fortune reporter, one major hurdle was the valuation of Oura. The company proposed to sell 50 million shares at $40 to $44 each, which would have raised approximately $2.1 billion in gross proceeds. However, the valuation proved tricky, as it depended on whether investors perceived Oura as a pure hardware manufacturer or a broader AI-enabled digital health platform.
If viewed as the latter, the valuation could be justified by the AI components and data-driven services it offers. On the other hand, if perceived merely as a ring manufacturer, the valuation appears significantly high.
Additionally, the IPO's financial structure may have raised concerns. Of the proposed 50 million shares, only 13.5 million (27%) were to be newly issued by Oura. The other 36.5 million shares (73%) were to be sold by existing shareholders, meaning the bulk of the cash raised would have flowed to current investors and insiders rather than the company itself. This allocation could make the IPO look like a liquidity event for early backers rather than a traditional fundraising round.
Lastly, Oura faces formidable competition from tech giants like Apple, potentially making it harder to justify its valuation. Despite these challenges, Oura stated it was "postponing" the IPO rather than cancelling it entirely, leaving the door open for a potential future attempt to go public.
Written by urgent.news from Fortune's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
