After pricing its class A shares at $29 each, Peloton slipped when public trading began. By mid-day, the stock was down 10%, with shares trading near $26. In afternoon trading, the decline continued. At the time of writing, shares were trading at $25, off 14% from their IPO price.

Peloton, which brands itself as a high-end exercise company, sells stationary bikes (starting from $2,245), treadmills ($4,295), and subscriptions to live-streaming workout classes ($39 per month). Despite the exorbitant prices, though, the company is rapidly losing money.

In IPO filings, the company reported a loss of $245.7 million during fiscal year 2019, the largest in its history. And while Peloton managed an $8 billion valuation—at least briefly—on the public markets, the company faces a tough road ahead.

Peloton confronts an outstanding lawsuit from music publishers for allegedly using unlicensed songs in its workout videos. Like Uber and Lyft, it also relies on independent contractors, using them to deliver and install its equipment. Peloton’s other risk factors include rent for its production studios, cloud computing costs (for live streaming), and subscriber retention.

“My estimate is about $18 to $19 [per share] and that’s giving [Peloton] the benefit of every doubt,” said Aswath Damodaran, professor of finance at New York University’s business school, on CNBC Thursday. “You have, fundamentally, a good business model. I just don’t think it can scale up enough to justify the market cap.”

The professor also added that Peloton’s market cap doesn’t reflect the company’s approximately 66 million options, which it could exercise to purchase nearly $2 billion worth of additional shares below market value.

But while investor sentiment has broadly turned against IPOing unicorns, it’s hardly given pause to venture capitalists, who continue to unload unprofitable equity. Even at $25-26 per share, investors in Peloton’s latest financing round would almost double their money.

Ultimately, “happiness” continues to sell. But it’s probably overpriced.

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