The $1 Billion Stock BUBBLE That No One Remembers

Heelys is the $900 million stock market bubble that everyone forgot about. In 2006, Wall Street invested nearly a billion dollars into Heelys, a children's sneaker featuring a single wheel embedded in the heel. Despite its unconventional nature, Heelys became a publicly traded company, heavily promoted and anticipated by some to rival Nike. Investors were enthusiastic, retailers struggled to keep up with demand, and parents joined waitlists. Children embraced the product, gliding through malls and school corridors, transforming walking into a new form of movement.

Beyond the viral trend, Heelys aimed to establish a new sport called "Heelying," where kids could perform tricks like grinding rails and kickflips using only their sneakers. The company invested in professional riders, trick videos, sponsored tours, tutorials, and competitions, even aspiring for Olympic recognition. This initiative positioned Heelys not just as footwear but as gear akin to BMX bikes or skateboards.

The journey began in 1999 when Roger Adams, a designer from Dallas, envisioned a shoe with an internal wheel after observing kids skateboarding. By 2000, he patented the invention, and by 2001, Heelys hit the market. The initial rollout was modest, but the impact was immediate, with kids captivated by the freedom and style the shoes offered.

By 2005, Heelys' popularity had surged nationally and globally by 2006. The company's IPO in December 2006 was a significant success, with shares opening at $30.30, a 44% increase from the IPO price of $21. Within days, the stock climbed to $32, and at its peak, the company was valued at nearly $900 million. Sales skyrocketed, with net sales increasing 377% in Q4 2006 to $71.1 million from $14.9 million the previous year. Net income jumped 700% over the same period to $11.5 million. For the full year, net sales increased 328% to $188.2 million compared to $44.0 million in fiscal 2005.

Heelys wasn't just selling shoes; it was promoting a lifestyle. The company invested heavily in marketing, producing stunt videos, demos, and sponsoring athletes. Their branding positioned Heelys as equipment for a new freestyle street sport. Children began attempting tricks, leading to the emergence of YouTube channels dedicated to Heelys stunts.

However, the product had limitations. With only one wheel, performing basic tricks was challenging, and advanced tricks were dangerous. Unlike skateboards or rollerblades, Heelys lacked a built-in safety culture. Children often used them without helmets or pads, leading to a rise in injuries. In 2006 alone, over 1,600 injuries were reported in connection to Heelys, with some ER doctors referring to them as "ankle breakers."

Consequently, schools, amusement parks, airports, and shopping malls began banning them. Despite this, Heelys continued to push the product, expanding their line with new models and dual-wheeled designs. They even proposed Heelys tracks for safe rolling zones and licensed the product overseas.

By 2008, the company's fortunes had reversed. Sales dropped 80%, and the stock value plummeted from a high of $32 per share to under $3. Investors panicked, executives departed, and lawsuits accumulated. The envisioned sport never materialized, and the hype faded. In 2013, Heelys was sold for just $63.2 million, a fraction of its peak value. Today, Heelys still exists, available online, with a few niche communities maintaining interest. However, the widespread appeal has diminished, and the brand no longer holds its former prominence.

The rise and fall of Heelys is a unique chapter in stock market history. It highlights how a children's sneaker with a wheel captured the imagination of investors and consumers alike, briefly transforming the world into a playground for those who wore them.

0:00 The rise and fall of heelys
1:40 Heelys Founder Roger Adams
2:10 The rise Heelys
2:43 Stock price skyrockets
3:03 Heelys lifestyle, tricks and stunts
3:45 One wheel, big risks
4:09 Hospitals report injuries
4:49 Wave of bans and lawsuits
5:16 Heelys doubled down
5:40 Stock collapsed
6:26 Heelys sold for $63M
6:35 The magic has gone