Before you invest in the Oura IPO, understand what you’re buying

In a statement, the health-ring maker added that it now has 5.7 million paying subscribers, up from 5 million three months ago, and that sales for the fiscal year, which ends on Wednesday, have risen 90% from the previous year. Based on previously published data in the prospectus, that would put sales at $1.7 billion.

Oura, which makes those $350-plus health-tracking rings that sync with your smartphone, is going public this week, and the IPO is 300% oversubscribed, according to Bloomberg .

If the report is right, that suggests — but does not prove — the stock could get a good pop when trading begins on Wednesday. Those who buy Oura's stock OURA in an initial public offering through their broker ahead of the IPO, in the hope of selling for a quick profit when trading begins, are traditionally known as "stags."

Stags have a decent chance of making a buck in this IPO, and if you do it through your IRA you will avoid the tax hit on a short-term capital gain. Caveat investor, as always. Good luck.

But short-term trading opportunities aside, what should we make of this IPO?

You're buying into an early stage company that competes with the biggest and most powerful consumer companies on the planet — including Apple AAPL, Alphabet's GOOG GOOGL Google, South Korea's Samsung KR:005930 and others. Yikes.

Pretty much all of the $2.2 billion or so being raised in the IPO is either going to existing stockholders, who are cashing in some of their gains, or to pay taxes on insiders' restricted-stock units.

The company's valuation in the IPO, likely to be around $14 billion, looks big compared to revenues, which were $1.9 billion in the first nine months of the fiscal year, let alone net income, which was just $61 million during the same period. Meanwhile operating expenses doubled through the first nine months, rising even faster than sales.

Samsung already makes its own ring. Apple, Google and many others make comparable wearables, such as the Apple Watch, that also monitor activity and health metrics and sync with your phone. These companies are increasingly getting into the business of healthcare. Oura offers its customers the option to order lab tests via their devices. Apple just announced plans to do the same.