Why Oura and Whoop Are Bound for IPO Glory

(Bloomberg Opinion) — Smart money moves on so fast. The semiconductor stocks that ripped through the roof in the first half of the year are struggling to reclaim momentum. But as a revolutionary technology, the productivity gains from artificial intelligencewill be reflected in some asset prices, somehow.

How about improving our health and lifestyle? Biotech stocks are on fire as investors bet that AI will speed up drug discovery and save billions of dollars in research costs. The next frontier is likely the fitness-tracking devices that might eventually integrate our biometric data into the healthcare system.

They certainly have the wind at their back. Oura Health Oy, a maker of smart rings that trace fitness, sleep, and even predict a woman’s menstruation and ovulation cycles, is seeking to raise up to $3 billion in a US listing as soon as September. It might be valued at more than $16 billion, a 45% jump from a year earlier. Meanwhile, Whoop, the maker of health-tracking wristbands, is doubling the size of its Boston headquarters after raising $575 million in March. The company turned cash-flow positive last year and counts sovereign wealth funds from the Middle East as its investors, which gave it $10 billion valuation. Whoop is on track for an initial public offeringin about 18 months.

Theirpublic debuts are bound to create a lot of buzz, because asset managers tend to invest in what they know — and they happen to love the wearables’ business model. On Hong Kong’s trading floors, Whoop’s screenless wristbands and Oura’s minimalist rings are a lot more common than Patagonia vests, the unofficial uniformworn byWall Street bankers. At the American Cub,diners can bespotted with Whoop’s premium straps,stacking nicely with Rolex watches or Cartier bracelets. In an era where everyone in finance is getting ripped, a Whoop or an Oura is a statement that you’re not only smart, but fit.

Yetthese wearables are far more thanstatus symbols. They’re useful tools to organize and optimize life, ideal for an obsessive, competitive crowd that likes to geek things out. It’s not even a zero-sum game witheach other, asmanyuserssport both devices, not unlike how traders habitually use multiple AI models toperfect their strategies.

Whoop Age, for instance, is an addictive feature that estimates one’s physiological age based on health data across categories. It’s paired with another metric called Pace of Aging —and if it shows a score ofless than one, it meansyou’rebuilding good habits that can slow downinevitable decay. Whoop then givesus the actionable: For me, improving sleep consistency and doing more low-intensity cardio, such as walking at least 8,000 steps a day, are myholy grail to anti-aging.

Whoop — and to a lesser extent, Oura — relies on subscription services. The bandis free, but to access its data and insights, Whooprequires membership plans that startat $199 a year. As for Oura, the latest ring costs $399, with a monthly membership of $5.99.

Investors often give subscription-basedbusiness models premium valuation, because cash flow is predictable and customer acquisition costlow. Oura would be worth about eight timessales at a $16 billion IPO valuation, going by the company’s 2026 revenue target. This valuation is roughly in line with that of big software companies such as Microsoft Corp.

The billion-dollarquestion for the two unicorns is therefore user stickiness— and this is where AI comes in to play.Having harvested tons of biometric data, such as around-the-clock heart-rate and getting to know my routine, Whoop’s AI agent is giving me better feedback over time. It has monitored progress in strength training, telling me how to hit daily optimal strain. I also discovered that I need to go to bed earlier to protect rapid eye movement, or REM, sleep, the lack of which hampers learning and mental balance.

Being dependent on subscription services, rather than hardware sales, will force the new-age wearables to commit to software development. Without continuallyenhancing their capabilities, users will flee. They have no choice but to be AI companies.

To be sure, data security concerns arean issue, in that the devicescollect informationas intimate as it gets.But so far, thathasn’t stopped the companies from making billions of dollarsor getting the endorsement of financiers.The wearables are addictive — which means recurring earnings — and ubiquitous in their social circles. Oura and Whoop are bound for IPO glory.