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Illustration: Aïda Amer/Axios

The mood has shifted and balance sheets and profits seem to matter to equity investors again, as the recent debuts of large, money-losing companies have been punished by the market.

Driving the news: Shares of smart stationary bike company Peloton opened down 7% and closed 11% below their $29 IPO price to mark the third-worst performance for an IPO that raised more than $1 billion since the financial crisis, Bloomberg data showed.

  • This is becoming a pattern.
  • "While most of the 11 other companies that have gone public this month priced within or above their marketed range, the largest of them, SmileDirectClub is trading about 44% below its offer price in its $1.35 billion listing," Bloomberg notes.

Why it matters: As the U.S.-China trade war has intensified, triggering depressed economic data and heightened recession fears globally, investors have gotten more selective about what stocks they want to buy.

  • Market leadership also has shifted from growth stocks to value plays as U.S. Treasury yields have plunged and investors seek out stocks that offer high dividends and have historically been less risky.

Between the lines: Peloton, like Lyft and Uber, is a company that loses more money as it grows.

  • Company filings show Peloton lost $196 million on sales of $915 million during the 12 months ended June 30, after losing $48 million on $435 million in sales the prior year.

What they're saying: “We totally understand the sentiment today,” CFO Jill Woodworth told Bloomberg. “As I’ve seen over the last couple of decades, there’s always been different periods of time when people focus on growth and when people focus on profitability.”

  • “It’s an interesting time in the markets,” CEO John Foley added. “There is anxiety. The markets are on edge.”

What they're not saying: Peloton may also be hurt by its dual-class share structure that gives certain owners, including its CEO, 20 votes for each share they own. Public investors only get 1 vote per share.

  • In addition to being a tough pill for traders to swallow, the dual-class structure means the companies aren't listed in many index funds favored by passive investors, including the S&P 500 index.
  • That's important as assets in U.S. index-based equity mutual funds and ETFs surpassed active stock funds for the first time ever this month.

The bottom line: The unimpressive market performance of Peloton, Lyft, Uber and SmileDirectClub has poured ice cold water on 2019's stock market IPO euphoria.

Go deeper: Peloton CEO John Foley on post-IPO falling stock price

Go deeper

Caitlin Owens, author of Vitals
4 hours ago - Health

Biden taps ex-FDA chief to lead Operation Warp Speed amid rollout of COVID plan

Photo: Alex Wong/Getty Images

President-elect Joe Biden has picked former FDA chief David Kessler to lead Operation Warp Speed, a day after unveiling a nearly $2 trillion pandemic relief plan that includes $400 billion for directly combatting the virus.

Why it matters: Biden's transition team said Kessler has been advising the president-elect since the beginning of the pandemic, and hopes his involvement will help accelerate vaccination, the New York Times reports. Operation Warp Speed's current director, Moncef Slaoui, will stay on as a consultant.

The case of the missing relief money

Illustration: Sarah Grillo/Axios

A chunk of stimulus payments is missing in action, thanks to a mix up that put as many as 13 million checks into invalid bank accounts.

Why it matters: The IRS (by law) was supposed to get all payments out by Friday. Now the onus could shift to Americans to claim the money on their tax refund — further delaying relief to struggling, lower-income Americans.

The post-Trump GOP, gutted

McConnell (L), McCarthy (R) and Trump. Photo: Erin Schaff-Pool/Getty Images

Republicans will emerge from the Trump era gutted financially, institutionally and structurally.

The big picture: The losses are stark and substantial.