IPO of "the first AI hardware stock" has been shelved

The listing setback of smart ring manufacturer Oura reveals an old investment market dilemma: calling oneself a "platform" does not mean the market will value you as one.

At the end of last month, Oura attempted to go public in the US but had to shelve the plan due to an insufficient number of buyers within the expected price range. The company blamed market volatility, but at the time, major indices remained near historic highs. According to The Wall Street Journal, the deeper contradiction behind this failed IPO lies in Oura's self-positioning as a tech data platform valued up to $15 billion, while potential investors merely saw a refined health consumer product.

This gap in positioning directly affects valuation logic and raises fundamental doubts among investors about the sustainability of the “single-product company” business model. For strategic investors like Eli Lilly who hold Oura pre-IPO shares, the company's ability to prove its data's value to medical payers will be a key focus for the next stage.

Previously, Peloton, Fitbit, Casper Sleep, GoPro—these brands all quickly gained market heat, only to hit the same wall: revenue growth depended on continually selling new products, rather than organic expansion of the existing user base.

Jay Ritter, a University of Florida professor studying IPOs, tracked 13 single-product consumer companies that went public between 2005 and 2024, with shocking results: on average, five years after listing, these companies’ stock prices were down about 32% from their IPO price, while the broader market was up 49% over the same period. In comparison, more than 1,200 other IPOs in the sample had an average increase of 68%.

The only exception that outperformed the market was Roku—which transformed its streaming player into an advertising platform and was acquired by Fox Corp. for $25 billion in June this year. This case highlights the core path for a single-product company to break through its ceiling: the product itself must evolve into a platform, subscription, or a service paid for by a third party beyond individual consumers.

Health tech analyst and consultant Stephanie Davis summed up consumer behavior as “very quick adoption, very quick abandonment.” This accurately describes the structural vulnerabilities faced by single-product consumer companies.

In its prospectus, Oura defines itself as a “health intelligence platform,” claiming to have collected more than 40 billion hours of biometric tracking data, hoping to build software and AI capabilities on top and sell data services to pharma, employers, or insurance companies.

However, there is a clear gap between current financials and this vision. For the nine months ending June 30, 2025, hardware sales (i.e., smart rings) accounted for about 80% of total revenue, while subscription revenue from members comprised only 20%. Overall gross margin is about 55%, far below typical levels for digital health software companies.

Despite this, Oura sought a valuation multiple of about 10 times its revenue in the past twelve months. By comparison, Fitbit was acquired by Google at less than twice its revenue.

Robin Boldt, Chief Investment Officer of healthcare-focused hedge fund Rock2 Capital, said:

"A hardware-centric business naturally commands a lower revenue multiple. Sustaining or even accelerating subscriber growth is what public market investors want to see."

Oura currently has over 5 million paid members, charging about $6 per month, and the company claims an annual retention rate of 85%. But a true platform relies on deep user lock-in—developers depend on the App Store for a living, drivers and restaurants rely on Uber to survive. But when users leave Oura, all they lose is their sleep history.

This relatively low user dependence forces Oura to continually invest heavily in marketing—about one-fifth of revenue—in order to acquire new buyers each year. This cost structure is at odds with the asset-light expansion model of real platform companies.

Industry insiders believe there are roughly three long-term survival paths for single-product companies.

The first is product diversification. Garmin was once centered on in-car GPS, a business line nearly destroyed by the rise of smartphones. But it successfully transformed by expanding into fitness watches, outdoor gear, and aviation/marine electronics.

The second is platformization. Roku sold players at razor-thin hardware margins, shifting to make money from advertising and subscription commissions.

For Oura and health wearable startups like Whoop, the third path may hold the most potential—getting third parties to pay. ResMed’s sleep apnea machines and Dexcom’s glucose monitors were able to scale because insurance companies covered the cost; Hinge Health’s virtual physical therapy services are mostly paid for by employers and health plans.

Oura has already established partnerships with several medical institutions, for instance, its temperature data has been integrated into fertility app Natural Cycles. But to truly attract payers, it’s not enough to merely prove the ring measures health indicators accurately—it must prove that wearing the ring can genuinely improve user health outcomes.

Being acquired may offer shareholders the most direct return. Eli Lilly has invested before Oura’s IPO and expressed interest in increasing its stake. Considering medicines like Zepbound and Mounjaro in Eli Lilly's portfolio require management, having real-time health data like patient sleep quality and activity is of strategic value.

Oura doesn’t need to become the next Apple, or even the next Garmin. What it really needs to prove is that the data it collects holds value for people beyond consumers—not just as a company selling high-end rings.