Peloton's blockbuster IPO (NASDAQ: PTON): What impact, if any, do you see it having on TrainerRoad?

To be clear: Posting of this thread should not be interpreted as a PTON stock recommendation as to whether to buy long or sell short.

The purpose of this post is strictly as it reads: to understand from other TrainerRoad users’ perspectives what impact, if any, do they see on Peloton going public on TrainerRoad.

TR might get some biz outta the deal, simply from more people becoming aware of indoor cycling and how hi-tech it has become. These newly exposed people will explore the available options and a few will end up at TR.

Don’t see any big money investors knocking on TR’s front door; their platform is too restrictive/individual based and not at all social/interactive based.

As much as I’d love to give my fellow TRer a virtual high five as they cry through Mary Austin…please don’t go that route, TR Inc.

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This is available in the document they are required to file with the Securities and Exchange Commission (SEC) prior to going public, known as Form S-1.
https://www.sec.gov/Archives/edgar/data/1639825/000119312519230923/d738839ds1.htm

As of June 30, 2019, Peloton sold 577,000 bikes and treadmills. The revenue is included in “Connected Fitness Products” below (screen shot from the S-1). “Subscription” revenue is from both subscriptions via the Peloton hardware platforms (bike and treadmill) and via the digital app. Lots more details in the S-1.

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So a unicorn bike company went public. Do we call that a unicycle?

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other than overly hyping the subject of this thread, I don’t think anyone is interpreting this thread as a stock recommendation.

You asked for an interpretation of the Peloton IPO, posted a link to crunchbase, and spoke of spectacular user base and growth numbers. Made me do a double take thinking I was on an investor site. So pardon me for being literal – an IPO means Peloton stock is now available on the stock market my first reaction is “would anybody buy the stock, and if yes, what is the investment thesis?”

Earlier this year I did a short-term trade on Fitbit, made a little money and since then the stock has dropped like a rock. At a really high-level the Peloton and Fitbit stories are similar: people want to get healthier, subscriber growth, user engagement, blah blah blah. Really not sure if Peloton will have legs, I’ve got family members using Peloton, and I’ve played around with it, and while its a slick product it serves a very different market (versus TR, Strava, etc). My buddy at Morgan Stanley wants the price to drop more before considering a small position.

So inline with Peloton being “Third-Worst Unicorn IPO Debut Since …” search result I saw, my feeling is that Peloton will need to make a strong case for how they plan to make money. Without thinking about it much, my question is “will enough people quit the gym and go Peloton?” I haven’t listened to Peloton’s investor pitch, just thinking out loud.

So, with USD 181 million subscription revenue in 2019 and USD 20 / mo, they must have about 750 000 subscriptions [digital + app], roughly doubling annually.

As I understand it [poorly], for USD 20, you get a bunch of workouts, some live, most [?] with videos. For virtually the same price on TR you get plans plus a set of “dumb” workouts. [“Dumb” here means not live, no video.] What’s the difference? To me, it looks like Peloton is about keeping fit, TR is about cycling.

In terms of the original question, though, it does seem that Peloton [and others such as Wahoo making moves] are boxing TR into a quite specific niche. Rather than just thinking about Peloton, I suppose that I’d be thinking somewhat more generally about the fitness field as a whole – about how to keep my product distinctive, but with a sufficiently broad appeal to enable growth .

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Peloton has a live class with a live instructor and leaderboard every 30-60 minutes. They also have thousands of historical classes on demand (although they deleted a ton of them due to the music lawsuit). They also have live and on demand running, yoga, strength, meditation, stretching, etc. classes. All available either on the bike or app. (No argument here, just clarifying what they offer).

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What impact will it have on TrainerRoad?

Short-term - not much if any. But the headwinds for raising future growth capital was reduced by some level today. Again.

Long-term - the TAM (total addressable market) just expanded, and at a premium price point that signals higher ARPU ceiling opportunities.

How many folks will buy a Peloton, turn into a cycling enthusiast, fall in love with outdoor events, get interested in sport-specific training, and eventually subscribe to TR? ¯_(ツ)_/¯

Or how many future urban/virtual-only athletes will there be? How many will get serious and train for future competitive e-sport leagues and competitions that, with fewer fan frictions and more monetization opportunities, compete for prize purses that exceed today’s top-level UCI events?

High disposable income tech consumers are disproportionately concentrated in urban locations. Indoor cycling is an exciting growth market. E-sports are blowing up. And health/fitness tech is still seeing a ton of action.

If I were an early investor in TR I’d be pretty stoked on today’s news.

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Depending on what TR is trying to be, I’m not sure the Peloton news really has much impact one way or the other. I don’t know what TR’s long term plans are, but they currently seem pretty focused on the community of avid cyclists who are interested in serious training. You can build a nice lifestyle company around that, but it’s a pretty small addressable market at the end of the day.

Companies like Peloton are addressing much different/broader markets. I’m sure Peloton overlaps with some of TR’s target market, but Peloton is driving their business through their group training dynamic and the social networking aspect. People love the idea of having training buddies without having the leave the house. It’s a really hot space and we saw a bunch of $'s being thrown at Zwift earlier this year as well. Peloton had revenue of almost $1B this year with a very steep growth trajectory. Compare that to the “giants” in the traditional cycling world that haven’t achieved that kind of revenue after decades in business. I know the community here is very cycling focused and it’s a big part of our lives, but high end cycling and Tri is really a niche business in the grand scheme of things.

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It’s more relevant for Zwift I’d say. Zwift, a lot more so than TR, has a similar mass appeal as Peloton. I’d bet Eric Min and team are paying a lot of attention to this.

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I think that the Peloton and TR user bases are largely mutually exclusive. NONE of the people I know that ride a Peloton actually EVER ride a bike outside. They ride it to get fit, stay fit, lose weight, etc. and the social aspect is a huge part of it. It is not at all about suffering by themselves in their basement for the purpose of making them better at riding an actual bike. There are exceptions, of course, but I think that is a minority of Peloton users.

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Peloton and Zwift are gateway products. Every year, 5% of their (growing) user base will decide to get serious about getting faster on their bikes in the real world and then switch to TR. This takes the pressure off of TR from having to provide gateway services. Win-win.

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  • Is there source data on that conversion rate you mention?
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I have been on TR for about 2 years and used to have a Peloton bike. After 1 year with the Peloton and using it around 3 days a weeks along with 2 TR sessions I ended up selling it for very close to my purchase price.

Reason for me selling it was I missed training with a real power meter and following a plan. Plus the integration of outdoor workouts on TR has been a game changer. Matt Wilpers does his power zone classes which are fine but honestly after a while I got a little tired of the instructors. The bike could be much better but the presentation and community are quite good.

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Same here. The instructors are a great entry point, but eventually the chatter and the music choices, combined with no structured plan, got me to consider buying a trainer again. Going from a Cyclops to a Neo was a massive game changer for me.

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No. The precise rate is not really important to the point.

Eventually i will upgrade my kickr snap to a Neo if it ever dies.

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A friend I know is getting a Peloton and they are just rolling up the cost into the montly payments as far as I know. No upfront $2500 or however much the bike costs.

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“Spinning” was the fashionable fitness thing to do for period of time. While not as big as Peleton appears to be, I see many similarities. Spinning still exists but no where near as big as it was on the 90’s. It will be interesting to see how Peleton intends to grow it’s offerings to stay relevant.

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Leaving aside the spectacularly fragile (well, completely broke ) balance sheet there are a few things they are over stating. Young urban middle classes are also suffering from overpriced housing, which means less floor space to install a big old exercise bike alongside your kitchen table, sofa and 50” LCD TV. Also to stereotype a little, this type of thing aimed at this demographic is incredibly driven by fashion. We’ve seen yoga, CrossFit, military fitness etc. go up and down in popularity over the last few years. Same as the restaurant trade - burgers one year, Mexican the next and who knows what next year will be a hit. People are fickle.

It’s a great product but the market will hit a ceiling at some point and then they will find new ways to monetise their offering. The only long term hope is that the bike really does tie them into the subscription model like Apple and it’s ecosystem but it’s a one trick pony. They could of course introduce a stepper, elliptical machine or something that might expand the portfolio. The other natural ceiling is that not all people want social online and do enjoy sweating in the same room as other people and thriving on that energy. Spin classes are popular but there aren’t enough people justify more than one slot a day at my local gym.

As for the Venn diagram of TR users vs. peloton? I’d guess it’s limited as the experience is very different. More of a crossover with Zwift.

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