Peloton went public on NASDAQ today with a blockbuster IPO. They are now in the select group of companies known as “Unicorns”; those companies at public offering with a market value of over $1 Billion (their actual IPO value was $8.4B).
As part of going public, the company sold 40 million shares to the public raising $1.1 billion in cash and buidling what is known as a huge "war chest”.
Peloton’s user base and growth numbers are spectacular - # subscribers and # workouts/month, with growth in both major segments of their business - “Connected Fitness Products” (Peloton hardware) and “Subscriptions" (both subscriptions while using their hardware ($40/mo) and their newest, fast growing category, Digital Peloton - a standalone app ($20/mo).
Having been a senior technology executive in the 90s and 2000 era (CEO, CMO, SVP, etc.), major financial announcements by industry participants always drove significant discussions amongst the executive team as to what implications it meant for our company and the industry as a whole. Sticking our heads in the sand and dismissing it as non-relevant was never a consideration. Reactions ranged from “great for us, great for the industry” (a rising tide lifts all boats) to a major threat (due to visibility, cash, backed up by impressive #s).
I will leave my own “2 cents” about this event for later (I’ve commented a bit in other threads, such as when Zwift closed their major private financing), but I’d be interested in hearing how other TrainerRoad users interpret Peloton’s IPO.
Other than both being fitness companies focused primarily on cycling, I don’t think there’s any overlap between TR and Peloton. I don’t think you can draw any conclusions about TR from this.
This is probably deviating a bit, but I think the challenge is converting people who do spin (I’m using this as a catchall for Peloton or any other class setting) into cyclists (training on TR or other structured formats) is making an argument regarding the limited benefits of spin classes. I wish I could articulate the spin vs structured training case because I know people wasting their time on spin when they could be better cyclists (and in better shape) by working on endurance cycling
You will see a relatively few people who will jump over to dedicated cycling from Peloton, but not huge numbers…and Peloton doesn’t really want them to, anyway.
Peloton is a fitness / technology company that is targeting fitness enthusiasts, not cyclists. Sure, there will be some blurring of the lines occasionally (one of the strongest guys in our group ride spent the winter riding a Peloton and was just *crushing *us this year…), but for the most part, these are distinctly different demographics.
I did find the fact that Peloton was not profitable yet, despite massive revenue growth, to be very interesting…obviously the IPO will go a long way to ease that debt now.
I don’t believe that it will make any real splash in the cycling community.
Peloton makes an awesome product. My girlfriend just bought the Peloton Tread and that piece of equipment is just beautiful and I even plan on giving running a shot. The class integration on their piece of technology is really great and I bet she’d also enjoy having a spin bike from them.
That said, I could never imagine leaving TR / Zwift / my Cycleops Hammer and going on a spin bike and doing spin class. As a cyclist I’m training for something specific, not just staying in shape.
I do think that Peloton is going to do well and it is probably a good idea to buy stock in them. They have a well integrated technology platform and have already shown that they are interested in expanding their reach (by moving from a spin bike to a treadmill). And everyone but the most serious cyclists would probably enjoy their product. But as I’ve said, I don’t believe that TR and Pelotons subscriber base overlap too much. With the exception of the cyclist who is not terribly serious with structured training. Currently they ‘might’ be savvy enough to find TR or more likely Zwift, and they will possibly gravitate to Peloton since their significant other could also use the spin bike.
This all said, if Nate and the rest of the TR team keep up their expansion, eventually they might be taking a bit off the Peloton market. So, perhaps Peloton will eventually make a bigger market base that TR can siphon off. This will of course be helped by companies like Wahoo which are making an indoor dedicate bike trainer, bike.
Wahoo is the company to watch in the “who can get in on the Peloton thing” game. They have the bike, they have the trainers for people who have bikes, they have Sufferfest and thus experienced delivering video based training. They even have a heart rate strap. And they have Sufferfest’s coaches. Did you know that the head Sufferfest coach is Neal Henderson who happens to also be Rohan Dennis’ personal coach? Wahoo/Sufferfest reminded me of that in a FaceBook ad about 20 minutes after Dennis won the Worlds TT . . . Clearly they have some marketing folks on call and likely a strategy. I think Wahoo is going to go hard after the fringe of the Peloton market for folks that want the indoor video fed workout thing but with a more real cycling vs spin class focus.
We own a Peloton. It’s a great piece of equipment, the instructors are very engaging, and the user base is incredibly connected and fervently pro-Peloton. The company also stands by their product. I know several people who were given brand new bikes when things broke after 2 years.
In general, the stereotype of soccer mom tends to be true, but there are definitely some cyclists there. Matt Wilpers does power Zone classes that are very good. Another of their instructors, Christine d’Ercole, has multiple national masters track titles. I just met up with more than a dozen other Peloton owners in Virginia to do the F2F Fondo and one of my friends owns the leaders jersey and some KOMs in multiple F2F states. Last year a bunch of us went to Moab to mtb too. I say all that to point out that their user base will spend money on the experience and absolutely love the product. As cyclists we are absolutely the minority though. I’ve talked a few of them into trainers, but in general, when you’ve forked out the money for the Peloton, a trainer is a hard sell.
Personally, I no longer ride the Peloton, but my wife rides 4 times a week. While the instructors i named do structured cycling specific training, I needed more of a long term plan and I like hard rock/metal, which is hard to find in the soccer mom world. I do still use the digital subscription for HIIT workouts and yoga classes a few times a week.
Maybe not always always, but enough to make it a predictable trend, esp. when considering whale IPOs – Alibaba, FB, GM, Visa, Uber, et al. Few escape the honeymoon plummet. At the end of the day, PTON is just another consumer good, think Thighmaster, Bowflex, and Sweatin’ to the Oldies.
…there are 63 million people in the U.S. that go to gyms and are looking for a better way to work out… – Peloton President William Lynch
Happy hunting, Willy. I’m not holding my breath for anything spectacular.
Peloton is not about the bike, so much as the subscription to the on-demand classes and ecosystem. I think that’s the #1 factor here and why it’s different than a Bowflex etc.
It’s more like Crossfit with their community, but you can do it alone and from home. Literally roll out of bed and onto the bike for some exercise.
Probably 63 million people have $20/mo to burn, but I’m guessing it’s a lot less that has $2-4,000+ of extra cash laying around for exercise equipment. Why do you think they are going to the pay-per-month gym in the first place?
But Peloton people don’t want to do it alone – they want to see and be seen. They are just too lazy to go to an actual gym! I’d venture to say that the social exposure is just a big of a driver, if not more, than the actual physical exercise. Now over to the Zwift thread…
Not true, since you can use the Peloton digital app option to get the classes without the actual Peloton branded equipment. You can effectively use any equipment already in place at home or the gym and still get the experience, without an additional capital expense beyond the monthly app fee.
Again… nothing to BUY if you already have one… (just like I said):
And it’s perfectly possible that people have a gym membership for access to weights, a pool or any other aspect… and might choose to add the Peloton experience using the gym gear. I am not claiming it is a common thing, the right thing or even a good thing… just that it is possible… and people might be able to leverage stuff they already own at home or rent via a gym membership.
I think this is a critical point…I’m guessing it was in the IPO financials, but I would love to see a breakdown of their revenue from hardware vs. monthly dues. Peloton knows that the long-term bet is on the membership.
A little busy here at work, but this afternoon after market close it made for humorous scanning of search results, with gems like “Peloton stock spins in reverse…” and “Peloton Tumbles in Third-Worst Unicorn IPO Debut Since …”
They raised a bunch of money, but would you buy the stock? At what price and what is your investment thesis?
Fantastic product and service. But as an investment case it’s an absolute dud. Amazing what people will stick cash into these days (including your own pension funds). I’m amazed it got this far and wasn’t pulled like WeWork, although that business has far worse fundamentals.
God good, no! The money has already left the building.
PTON is relying on way too many human factors in order to ensure success.
I imagine it won’t be long before adverts start creeping their way into peloton products.
I’d venture to say that the social exposure is just a big of a driver, if not more, than the actual physical exercise. Now over to the Zwift thread…