Illustration: Aïda Amer/Axios

Apparently investors love to read IPO prospectuses in August, because both Peloton and WeWork unveiled their S-1 filings last month.

The big picture: The two companies are similar in that they both spend a lot of money on sales and marketing, which they then attempt to recoup over time with monthly payments from their customers.

The big question: How much time does a customer need to remain a customer before a company becomes profitable?

In the case of Peloton, the answer is "almost immediately." Customer acquisition costs are roughly equal to the markup on the company's bicycles and treadmills. After that, Peloton makes money every month that the customer pays $39 for a fitness subscription.

  • But, but, but: Peloton's losses have been rising along with its revenues. As the NYT's Erin Griffith reports, "competitors and copycats are moving in aggressively," often at significantly lower price points. If Peloton wants to maintain or increase its market share, its customer acquisition costs are probably going to increase over time.

WeWork's financials are harder to understand. Rett Wallace, the CEO of private-company intelligence firm Triton, has called the company's S-1 "a masterpiece of obfuscation." It's therefore hard to work out exactly what WeWork's customer acquisition cost is. But Wallace estimates that a tenant needs to stay in place for 13.5 years, on average, before they break even for the company.

  • Between the lines: WeWork's value proposition is that it doesn't lock tenants into long leases. But the company's accounting hides the cost of finding new tenants to replace ones who move out.
  • How it works: After a location has been open for 24 months, its sales and marketing expenses no longer appear in WeWork's corporate sales and marketing budget, and instead are incorporated into the individual budget for the location itself. Shareholders therefore have no way of seeing WeWork's total sales and marketing expenses.

The bottom line: "Customer acquisition costs always go up, not down," says Wallace. Anybody buying into the WeWork or Peloton IPOs should bear that in mind as they try to model when and whether either company might become profitable. In the case of WeWork, the company itself seems to be asking similar questions.

Go deeper: WeWork CEO returns $5.9 million "trademark payment" to the company

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Louisville officer: "Breonna Taylor would be alive" if we had served no-knock warrant

Breonna Taylor memorial in Louisville. Photo: Brandon Bell/Getty Images

Sgt. Jonathan Mattingly, the Louisville officer who led the botched police raid that caused the death of Breonna Taylor, said the No. 1 thing he wishes he had done differently is either served a "no-knock" warrant or given five to 10 seconds before entering the apartment: "Breonna Taylor would be alive, 100 percent."

Driving the news: Mattingly, who spoke to ABC News and Louisville's Courier Journal for his public interview, was shot in the leg in the initial moments of the March 13 raid. Mattingly did not face any charges after Kentucky Attorney General Daniel Cameron said he and another officer were "justified" in returning fire to protect themselves against Taylor's boyfriend.

U.S. vs. Google — the siege begins

Illustration: Sarah Grillo/Axios

The Justice Department fired the starter pistol on what's likely to be a years-long legal siege of Big Tech by the U.S. government when it filed a major antitrust suit Tuesday against Google.

The big picture: Once a generation, it seems, federal regulators decide to take on a dominant tech company. Two decades ago, Microsoft was the target; two decades before that, IBM.

Dion Rabouin, author of Markets
2 hours ago - Economy & Business

Why the stimulus delay isn't a crisis (yet)

Illustration: Aïda Amer/Axios

If the impasse between House Speaker Nancy Pelosi and the White House on a new stimulus deal is supposed to be a crisis, you wouldn't know it from the stock market, where prices continue to rise.

  • That's been in no small part because U.S. economic data has held up remarkably well in recent months thanks to the $2 trillion CARES Act and Americans' unusual ability to save during the crisis.