Exercise startup Peloton, known for streaming spin classes for its indoor bikes, has registered to go public, joining a crowded field of tech companies that have or will join the public markets this year.
Like many of its tech peers, Peloton appears confident in its plans for a public offering, despite not yet being profitable. In its registration documents, the company reported that it had made $915 million in revenues in the past fiscal year, a significant jump from the $435 million it produced the year before, but ultimately saw net losses of about $196 million, about quadruple its previous net losses of $48 million.
Founded in 2012, Peloton produces high-end, internet-connected stationary bikes and treadmills that work in concert with its streamed exercise classes. Bike packages approximately start at $2,200 (including delivery) while the treadmills begin about $4,300. Required content subscriptions are $39 a month. The company also offers a $19.49 option that lets users stream classes on mobile devices or a computer.
Since 2016, Peloton has seen its subscriber base grow from 107,000 people to more than half a million.
"Peloton's a really interesting case. This has been a year — obviously — of a lot of high-profile IPOs already," Joshua Franklin, a corporate finance correspondent at Reuters, told Cheddar on Wednesday. "Peloton kind of gets a little bit of the good stuff that people have liked about IPOs so far this year, and also a little bit of the stuff that people aren't so wild about."
He pointed to the Peloton's subscription model, revenue growth, and focus on disruption in the fitness space as potential positives for investors. On the other hand, Franklin cautioned that: "They don't specify in their IPO filing how they're going to reach profitability. And we've seen with Uber and Lyft, that's something that investors really are quite focused on these days."
In going public, the startup hopes to appeal to investors with a multifaceted business model. It has framed itself as a fusion of a media, fitness, and tech company, producing interconnected hardware, platform, and content. In the prospectus made public today, it says: "We are a technology company that meshes the physical and digital worlds to create a completely new, immersive, and connected fitness experience.
Peloton also says it's an "apparel" and "social connection" company because it sells branded clothing and incorporates a messaging feature into its streaming platform.
Unlike popular spin class brands SoulCycle and Flywheel, Peloton does not rely on physical locations. It runs a small number of studios where the startup films the content it streams online, but in its filing the company said revenue from classes at these locations "has been immaterial to date."
The startup appears to have inspired — or at least, catalyzed — an emergence of similar businesses. Mirror, founded in 2016, sells vertical, in-home screens that stream live exercise classes. 2017 saw the introduction of Hydrow, a startup that sells modernized rowing machines that stream rowing classes.
Meanwhile, Equinox Group has announced its plans to sell an at-home bike that will feature SoulCycle spin classes. Flywheel has also started selling their own home bikes with coordinated, live-streamed content, a move that has earned it a lawsuit over a patent dispute with Peloton itself.
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Shares of Peloton recovered after CEO John Foley debunked rumors that the company would halt production of some products, confirming that the company will instead be quote 'right-sizing' production as it faces lagging demand.
This comeback for the stock comes after reports surfaced that Peloton could completely hit the brakes on production of its bikes and treadmills. In the last year, Peloton has wiped nearly $40 billion off its market cap, with its stock down over 70% in 2021. Doug Astrop, managing partner at Exponential Investment Partners, joined Cheddar Movers to discuss.
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