The IPO story gets complicated

Public market investors have become less willing to leave their comfort zones, and it's manifesting most obviously in the IPO market.

The big picture: Novel disruption has fallen out of favor, with many preferring more time-tested models like enterprise SaaS and biotech.

1. Peloton yesterday raised over $1.1 billion in its IPO, pricing at the top of its $26-$29 range, but its shares then got crushed (although still valued well above the last private mark). Its CEO talked to Axios yesterday about the falling stock price.
2. Endeavor, the live events and artist representation firm led by Ari Emanuel, last night canceled an IPO that originally was to raise over $600 million, before it was later downsized.
3. WeWork... well, you know the story there.

Yes, all three companies have dual-class shares. Yes, all three were highly valued by venture capital or private equity investors. Yes, all three were unprofitable for the first half of 2019.

• Those characteristics are also true of Datadog and Ping Identity, both of which had successful IPOs this month and continue to trade above offering.

The trio's real similarity was that each had a very complicated story.

• Peloton is a high-end hardware and SaaS business that produces original media content, sells apparel, and runs its own delivery logistics.
• Endeavor began life representing movie stars and Donald Trump, but later expanded into a massive live events business that includes the UFC and Professional Bull Riders. Plus, it's got a streaming platform.
• WeWork... again, it's different.

All of this comes against the backdrop of Uber, which also had a very complicated story and an IPO that emboldened short-sellers.

Up next: A lot of biotech startup IPOs, but no high-growth, complicated tech unicorns.

• "We're about to get a bit of a break from those sorts of deals, which I think is good for everyone," a top Wall Street banker told me this morning.
• Private markets follow public markets, so don't be surprised to see some valuation and/or deal size pullback for these "hard to comp" companies.
• Particularly if SoftBank fails to raise Vision Fund 2.
• Goodbye to egregious governance terms. Dual-class will survive, but WeWork laid a third rail for others to avoid.

U.S. IPOs have still outperformed the S&P 500 in 2019, although the gap has shrunk significantly this month.

The bottom line: The sky isn't falling, but it's gotten a lot darker. And, for some, downright stormy.