You might have heard the news. Peloton, the on-demand fitness media company known for its high-end expensive stationary indoor bikes, announced last week that it filed confidentially for an initial public offering with the Securities and Exchange Commission. This is an important step toward becoming a publicly traded company. The number of shares, price range, and the date of the IPO have not been disclosed as of this time.
I’ve written and spoken about the rise of the direct to consumer (D2C) marketplace for digital fitness and wellbeing extensively for almost the past decade and the trends we thought would happen are indeed happening. Check out my presentation 2012 Trend Report - What Health And Fitness Leaders Should Keep Their Eyes On and the idea of “Mass Mingling” involving the concept of connecting large groups of fitness communities digitally. Convenience and digital deployment are certainly now the king and queen of fitness and health disruption which is well underway given the valuation of Peloton, its unique business model including its cool nearly 100 retail popup locations, and its rapid rise to influence. This industry transition is just getting started by the way.
Peloton’s CEO John Foley has implied a public offering was coming since 2018. Confidentially filing to go public isn’t uncommon for “emerging growth” companies with revenues under $1 billion in because it allows them to keep secret sensitive private information until they go public while the SEC reviews their registration statement. Peloton was last valued at over $4 billion, but Bloomberg reported that valuation that could skyrocket to $8 billion as the at-home fitness trend continues to expand.
Since it was founded in 2012 Peloton has grown substantially. According to prior interviews the company was looking to “bring the intensity and devoted following of cycling classes like SoulCycle and Flywheel into the home.” New riders cite feeling “instant camaraderie” with both the instructors and fellow cyclists, a connection that keeps them hooked. Peloton’s nearly $2,300 bikes, with a 22-inch screen to livestream or watch over 10,000 on-demand workouts, are seen by many to be expensive. A subscription costs $39 a month for unlimited classes. A recent music licensing issue resulted in some users claiming the app’s music quality has declined and the company recently began selling the Peloton app without the bike itself along with offering a Peloton treadmill.
Peloton is a significant player in the digital-fitness space, but competition looms as more businesses enter a market which is projected to grow 40 percent to $27.4 billion by 2022. In fact more consumers global rely on digital fitness solutions as an alternative or adjunct to their fitness or gym memberships. Many other companies including Flywheel and NordicTrack also offer at-home stationary bikes and streaming classes. Apps like Zwift and Aaptiv along with many others are also competing for digital fitness and gym member customers as well. Gym chains like Gold’s Gym and many others have introduced their own technology solutions to keep up. My friends at Wexer have been offering these types of streaming content solutions to health clubs and gyms for years.
Regardless it seems Peloton will be the first significant competitor in the digital-fitness space to go public, while others’ attempts have not worked out (pardon the pun). Aaptiv CEO Ethan Agarwal recently stepped back from his suggestion that the business could go public in 2020, and Peloton’s studio-based competitor, SoulCycle, owned by the Equinox group, withdrew from its IPO registration in 2018, citing “market conditions.”
What does Peloton filing for an IPO mean for fitness, wellbeing and technology ? It reflects what I have been saying for some time. Peloton and its investors are betting on a long-term and sustainable D2C business model for its live-streaming workouts and on the growth of digital fitness in general. For fitness enthusiast this is good news as the variety of fitness and wellbeing solutions and offerings will continue to explode. For old school competitors in the fitness space it is a warning to get prepared. Don't believe me ? Check out what has happened to the fitness equipment consumer company Nautilus as its stock has plunged in the past eight months.