Peloton priced shares at $29 after the bell Wednesday, valuing the company at $8.06 billion as it prepares to make its public debut Thursday. That's at the high end of the original $26 to $29 price range Peloton was targeting. The company raised $1.16 billion in the offering.
Peloton is pitching itself to investors as more than just an at-home fitness company. With live and on-demand classes led by popular instructors, plus branded gear and clothing that members can flaunt in public, Peloton is hoping its cult-like following translates to a successful IPO.
Peloton boasts a loyal subscriber-base with over 1.4 million members that logged 55 million total workouts in fiscal 2019. In its S-1 filing, Peloton also said it had a 95 percent member retention rate which helped the company rake in $915 million in revenue. Most of that money came from sales of Peloton's high-margin and high-cost Connected Fitness Products.
The Peloton bike costs about $2,000 and its treadmill more than $4,000. The Connected Fitness Subscription, which allows members to stream classes for $39 a month, accounted for nearly 20 percent of Peloton's revenue for fiscal 2019.
Those classes are only getting more popular. Peloton says the average number of monthly workouts per connected subscriber has about doubled since the first quarter of 2017 to more than 12 workouts a month.
Still, losses for the company are widening. Peloton's annual net loss more than quintupled from $47.9 million in fiscal 2018 to $245.7 million in 2019. The company doesn't expect to achieve profitability in the near future.
Another reason that may give investors pause, Peloton is currently facing a $300 million lawsuit over the use of music streamed in its classes. The National Music Publisher's Association claims tracks from big-time artists like Taylor Swift, Adele, and the Beatles, have been used unlawfully. Peloton has spent $50.6 million on music licensing over the last three years.
Peloton will start trading Thursday on the Nasdaq Exchange under the ticker symbol PTON.
Markets started the week on a rocky note: the major indexes at most points during the day were double digits off of their highs, on the path to their worst performances since March 2020 and for the Nasdaq, since October 2008. Investors were skittish about the Federal Reserve's meeting this week, where the central bank is expected to announce more details about its plans to hike interest rates and taper asset purchasing this year. Art Hogan, Chief Market Strategist at National Securities, joined Cheddar News' Closing Bell to discuss today's market meltdown, why investors were feeling pressure, what to expect from the Fed, and more.
AT&T announced it's offering two tiers of high-speed internet, 2 gigs, and 5 gigs, to its fiber customers in more than 70 metro regions. AT&T Consumer CEO Thaddeus Arroyo joined Cheddar to talk about the newly available speed upgrades for 5.2 million of its customers, and where the rollout goes from here. "Over the course of 2022, we'll rapidly continue to retrofit the rest of the base," he said. "And importantly now is, as we build-out, we've talked about building out to cover 30 million homes and businesses by the end of 2025, we're going to continue to ensure that every new location that we stand up has this multi gig capability."
Autonomous driving tech company Waymo is partnering with transportation and logistics business J.B. Hunt. The two firms are teaming up to bring autonomous shipping to the highways. Head of commercialization for trucking at Waymo, Charlie Jatt, joined Cheddar to discuss how the companies are combining their strengths. "We, of course at Waymo, are working on the technology side of affairs, and J. B Hunt brings critical operational and commercial expertise," Jatt said. "And together we're going to work to deploy the first fully autonomous Class 8 truck hauling goods for one of their customers in the coming years in Texas."
Amid a rough week for Peloton's stock, as well as its image — its bikes being the cause of death for two fictional TV characters now — an activist investor is calling for a change in upper management. Chief investment officer of Blackwell, Jason Aintabi, petitioned in a letter that Peloton’s CEO, John Foley, must be fired. Joining Cheddar to discuss the ultimatum, Hatem Dhiab, a portfolio manager and managing partner at Gerber Kawasaki Wealth and Investment Management noted the conditions leading to the demand for Foley's removal. "The stock is basically 85 percent below the high," he said. "I think there is some change that needs to happen, and that's just the reality."
Talent Resources Sports is partnering with ABG Entertainment to host Sports Illustrated The Party during the weekend of Super Bowl LVI, featuring musical performances by Kygo, Jack Harlow, and other guests. David Spencer and Mike Heller, co-CEOs and founders of Talent Resources Sports, joined Cheddar to discuss the details behind putting on the event. “We’re just really pumped that after all of the things that got canceled people will finally have a place to let some steam off in such an exciting moment, such a charged moment with the Super Bowl,” Mike Heller said about putting on the live event after previous COVID-related cancellations.
Mayors in cities like Miami and New York City are considering introducing cryptocurrencies as a way to reduce economic inequality. Miami Mayor Francis X. Suarez has even pushed for distributing Bitcoin dividends to the city's inhabitants.
As companies look toward the metaverse concept to further move their companies online, Shep Ogden, CEO and co-founder of Offbeat Media, spoke with Cheddar about questions investors should be posing to businesses like how customized the metaverse experience will be. "One of the best things that people can do, or companies can do, to be competitive is really find those influencers within the community that are very deep in the space," Ogden added.
