Reports Point To Peloton Talking With Banks About An IPO

Peloton Interactive

Peloton Interactive Inc., a startup that makes web-connected home-fitness equipment and content, is reportedly seeking to go public later this year. According to an article published on the Wall Street Journal, the company is talking with banks about an initial public offering.

The journal cited unnamed sources that said Peloton is seeking a valuation more than $4 billion. Peloton had a valuation of $1.25 billion in 2017 after raising $120 million. The valuation rose to $4 billion in August 2018 after the company received $550 million in a funding round led by TCV, a venture capital firm known for investing in LinkedIn, Facebook, and Netflix. Executives of Peloton said that was the last round of financing before pursuing an IPO.

The company also has the backing of tech venture capital firms Tiger Global and True Ventures, as well as private equity firm L Catterton. Other investors with a stake in Peloton include GGV Capital, Tiger Global Management and Kleiner Perkins Caufield & Byers.

In a 2018 interview with the Wall Street Journal, Peloton co-founder and chief executive officer John Foley said it was sensible for the company to pursue an initial public offering this year. The company is expected to pick underwriters for the offering over the weeks to come, according to the report.

Peloton is based in New York and offers exercise bikes that are fitted with tablets, allowing users to subscribe to spin classes and enjoy workout class environment from their homes any time they want. The exercise bikes cost $1,995, excluding the $250 delivery fee and the $39-per-month subscription fee that customers pay to stream live and on-demand classes. Customers can also attend the company’s cycling studio in Manhattan, which offers 11 and 13 classes daily.

Peloton says that its bikes are used an average of 13 times each month per household and 96% of its customers remain subscribers. The company has added live music on its platform, as well as new categories of classes and the ability to give a digital “high five” to fellow riders.

Founded in 2012, Peloton is making profits and Foley expected to rake in revenues of $700 million from its retail business, equipment, and subscriptions. However, the company forecasts a loss during the second half of 2019 as it launches its latest treadmill.

Peloton faces competition from SoulCycle, FightCamp, Mirror, NordicTrack, CycleCast, Echelon and Flywheel Sports. SoulCycle has over 90 studios across the U.S. and Canada. Launched in 2012, the company also filed for an initial public offering in 2015 but withdrew the plans to go public, citing “market conditions.”