How did Peloton stock grow from a Kickstarter idea to a multi-billion-dollar public company? Like for most companies, timing is essential and is a huge difference-maker. Can the company live up to its hype and survive a post-pandemic world? Let’s take a look at this Peloton stock story.
Peloton (PTON) Stock Introduction
Peloton’s story began just over a decade ago, in January 2012. Their idea was simple. They were bringing studio cycling into your home and creating an online community of cyclists.
After releasing its initial bike, Peloton released a variety of other merchandise. I’ll talk about that later. Following a successful Kickstarter campaign in 2012, Peloton released its prototype in 2013.
The idea of having your biking studio at home and being able to compete against friends and strangers quickly became appealing to many.
The competition aspect of the brand was a huge success. Many news outlets picked up the story of Peloton and joined the hype.
In September 2019, Peloton went public. The company was given a unicorn valuation due to its potential market size.
Since then, its growth has exploded. Some attribute its growth to the pandemic. As we all know, working out in gyms has become increasingly difficult.
Many turned to the online platform to be able to exercise from home. Is the hype sustainable past the pandemic? Below are some key statistics highlighting Peloton’s future lookout.
Subscribers Increasing
On a positive note, subscribers have steadily increased each quarter. Their retention rate is an outstanding 96%. Users have been loyal to Peloton, but since gyms reopened, many have gone back. Two-thirds of their users are between the ages of 25 and 44.
Many users might seek to split their workout time between a conventional gym and the Peloton platform. Human interactions remain important to a successful workout, but the online competition is unique. Peloton will have to decrease its spending to become profitable eventually.
Bikes and Accessories
The Peloton Bike is connected to the internet, allowing users to compete with friends and strangers with a touchscreen. The cost of the basic Bike is $1,495. The Bike+ + has fully immersive technology and added features for cyclists seeking a more realistic home workout. The cost is $2,495, including delivery and setup.
It is possible to bundle the Bikes with accessories such as cycling shoes, light weights, dumbbells, a bike mat, a reversible workout mat, and a heart rate band for an additional cost. Peloton also offers financing on its items.
Users are generally very satisfied with the quality of the product, which explains the cost of the equipment. The Tread is also available with the same optional accessories as the Bike. The starting price is $2,495 + $350 in delivery and setup fees.
The price of a regular stationary bike and treadmill will be lower. What sets Peloton apart from the rest is its unique competition model and the quality of its products.
Membership
Membership is required to access all the classes (cycling, running, strength, yoga, stretching, and more). Like Netflix, users can create an individual profile for all family members.
Peloton offers a variety of apparel for its users. Items include leggings, shorts, hats, tank tops, and many more.
Peloton Stock Infrastructure
Peloton has 78 showrooms across the US and Canada and 12 in Germany and the UK. Customers can have a personalized walkthrough and a class trial. Many customers can immediately become sold on the Peloton idea.
Unfortunately, these showrooms also come with a big monthly bill. The last earnings call provided investors with some information about the future of these warehouses. The new CEO claimed many of them will close soon, saving hundreds of millions of dollars.
As we can see above, the company has a variety of revenue streams. They can capitalize on the loyalty of their members. Unfortunately, their expenses are too high, with production capacity and time issues.
If Amazon or Nike decide to save the company, they will be sure to reduce expenses and optimize the supply chain. They can also expand Peloton’s footprint globally. Four countries are not enough for a public company. To dominate the exercise from the home market, Peloton must expand.
Peloton Stock Competitors
| Symbol | Name |
|---|---|
| NLS | Nautilus, Inc. |
| PLNT | Planet Fitness Inc |
Peloton’s story and strategy may be one of a kind, but its business model is certainly not one of a kind.
Many gyms with an existing customer base can create their merchandise for a home workout.
We saw a lot of people looking into working out at home. Especially lately.
As a result, that could hurt gyms. But it’s great for companies like Peloton, which thrive off home workouts. Are there other companies that can compete with them?
Below are two public companies that can compete with Peloton.
Nautilus, Inc. (NYSE: NLS)
Nautilus has been around for over 30 years. They have physical locations in over 80 countries. Retailers such as Costco, Amazon, Sears, and others sell their products. The company also capitalized on home workouts during the pandemic. Nautilus owns household brands Bowflex, Schwinn, and others. Their affiliates have a wider range of equipment than Peloton (stationary bikes, treadmills, ellipticals, rowing machines, and home gyms) and online applications.
Planet Fitness Inc (NYSE: PLNT)
How did Peloton grow from a Kickstarter idea to a multi-billion-dollar public company? Like for most companies, timing is essential and is a huge difference-maker. Can the company leave you?
Planet Fitness has been trending in the opposite direction recently.
Unlike Peloton and Nautilus, their stock is almost at an all-time high. What is the reason for their success?
First, Planet Fitness leases its stores. They have over 2000 locations across the US, Canada, Mexico, Panama, the Dominican Republic, and Australia.
However, only 80 gyms are corporately owned. The rest are all franchises.
Owners must pay $30,000 in initial fees and a 7% royalty on gross monthly and annual membership fees.
Final Thoughts: Peloton Stock
To conclude, Peloton stock has been very successful in a COVID world. Once things go back to normal, gym rats might ditch the home workout. Peloton has to find a way to adapt to survive. They are currently seeing offers from Nike and Amazon for a buyout. Alternatives to Peloton do exist, but they lack the competition feature.
Frequently Asked Questions
Yes, Peloton stock trades on the Nasdaq Global Select Market under the ticker symbol PTON.
For Peloton's most up-to-date share price (PTON) stock, click here.
A Peloton All-Access Membership will pay back $44/month plus tax. This membership provides unlimited streaming of live and on-demand classes on the Peloton bike and access to the Peloton app. It's pretty good if you ask me. You can also go with the Peloton app-only membership for $12.99 monthly plus tax. With this membership, you can access thousands of on-demand classes on your web and Apple iOS/Android app devices.
You can buy two competitor stocks of Peloton which are Nautilus, Inc. (NYSE: NLS) and Planet Fitness Inc. (NYSE: PLNT).
The Vanguard Group, Inc. holds the largest ownership stake in Peloton, with approximately 7.4% of the shares outstanding.
