Oura's ring is the most photographed piece of jewelry in America that isn't a wedding band — on the TV ads, on the fingers at the gym, probably on yours. Last month the company tried to take it public at a valuation of as much as $15 billion and couldn't find enough buyers. It blamed “uncertainty in the IPO market,” with the major indexes sitting near records. David Wainer, in Wednesday's Heard on the Street, has a less flattering diagnosis: Oura pitched itself as a technology and data platform, and investors looked at it and saw a very nice gadget.
The difference isn't semantics. A platform grows almost for free once it's built; a gadget maker has to win the same customer over again every upgrade cycle. Investors have paid for that lesson before — Peloton, Fitbit, Casper and GoPro each became a household name in a hurry, then discovered that revenue only grew as long as the next box sold. University of Florida IPO scholar Jay Ritter tracked 13 single-product consumer companies that listed between 2005 and 2024. Five years on, their shares had lost about 32% on average from the IPO price while the market gained 49%. The more than 1,200 other IPOs in his sample rose 68%. The lone exception was Roku, which turned a streaming stick into an ad platform and agreed in June to sell to Fox for $25 billion.
Oura's own numbers tell you which column it's in today. About 80% of revenue still comes from selling rings and 20% from memberships; gross margin is about 55%, well under what digital-health software earns; marketing eats about a fifth of revenue because the company has to sell new rings every year. Yet the ask was about 10 times trailing revenue — Fitbit went to Google for less than two times. The subscription is real: more than five million members pay about $6 a month and 85% stay a year. But as Wainer puts it, “Leave Oura, and you lose little more than your sleep history.” Developers can't walk away from the App Store; drivers can't walk away from Uber. That dependence is what a platform multiple pays for.
Three exits, none proven
Wainer sketches the ways out. Stop being one product, as Garmin did after smartphones ate the car-GPS business. Become a platform, as Roku did. Or get someone else to pay — insurers cover ResMed's CPAP machines and Dexcom's glucose monitors; employers and health plans pay for Hinge Health. Oura has healthcare partnerships and more than 40 billion hours of biometric data, and Eli Lilly (LLY), an early investor, might well want to know whether patients on Zepbound and Mounjaro are sleeping better. The simplest exit for shareholders would be a buyout. All of it is possible. None of it is in the numbers yet.
Our read
This is Investments/Risk (IN04) with a behavioral core, and it hands you a base rate you can carry around: buzzy single-product consumer IPOs, down about 32% over five years against a market up 49%. That's the number to hold up against the ad campaign when the next one lists. The trouble with a product you love is that you confuse being a happy customer with being a good shareholder; the ring on your finger is evidence about the ring, not the stock. Oura's shelving isn't the end of the story — Wainer thinks it has potential — but potential is what you're paying 10 times revenue for, and most of these companies never grow into it.
Our verdict is avoid, aimed at the category rather than the company: don't pay platform prices for hardware until the recurring, someone-else-pays revenue shows up in the filings. Lilly is held at weight in 23 books; nothing added. If a buzzy listing from the past few years is sitting in your account, the question for the next review is simple — is it a platform yet, or still a product? You'd rather ask it now than have the next TV campaign answer it for you.