Peloton IPO

Fast-growing fitness company Peloton achieved a $7.7 billion IPO valuation when it listed on the stock market. Here, we explore the listing and the outlook for the business. Find out how you can trade and invest in Peloton with IG.

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How to trade the Peloton IPO

There are two ways to gain exposure to the Peloton IPO with IG – trading derivatives or investing via share dealing:

Spread betting and CFD trading

Spread bets and CFDs enable you to speculate on Peloton’s share price movements without having to own the shares. Because you don’t own the assets, you can go long or short, which means you can trade rising or falling prices.

Share dealing

With IG’s share dealing service, you can buy and own Peloton shares. If you invest in stock, you can only profit if the share price goes up. By owning Peloton shares, you could also receive dividend payments.

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When did Peloton list?

Peloton listed on the Nasdaq 100 (US Tech 100 with IG) on 26 September 2019, under the ticker PTON.

What is Peloton valued at?

Peloton opened with a valuation of $7.7 billion, which was lower than the expected valuation of $8.2 billion. Shares floated at $27 a share, but were down by roughly 7% by the end of the trading day.

Why did Peloton list on the stock market?

It is not known exactly why Peloton listed on the stock market, but it could be that the company wanted to raise capital for the business and increase customer loyalty. The IPO is hot on the heels of other tech startup IPOs such as Uber, Lyft and Pinterest.

Who are Peloton's investors?

Peloton’s investors include Tiger Global, True Ventures, Wellington Management, Fidelity, NBCUniversal, Kleiner Perkins and Balyasny. Its last funding round was conducted in August 2018, when it raised $550 million to fuel the development and launch of a new product, international expansion and marketing. Peloton has raised just under $1 billion since it was founded.

What is the outlook for Peloton?

The outlook for Peloton is positive when you consider the growth of the company. It is expanding its offering in New York and London and will also be moving into Germany by the end of 2019.

However, there are also other factors to consider regarding the future of the business. For example, losses are increasing year on year. In 2017, Peloton reported losses of $71.1 million, which increased to $195.6 million in 2019.

How has Peloton been performing?

Peloton has been performing well, with more than 1.4 million members and a retention rate of 95% since its launch. In its 2019 financial year, Peloton reported $915 million in revenue. Equipment sales and subscriptions secure this income. Active subscribers showed a significant increase from 107,708 in 2017 to 511,202 in 2019 – which represents more than 370% growth.

Who are Peloton's competitors?

Peloton’s competitors include SoulCycle, Life Fitness and Amer Sports ($4.7 billion). SoulCycle started its initial public offering process in July 2015, aiming for a valuation of $900 million, but decided to pause the IPO in 2016 due to unfavourable market conditions. Though Life Fitness does not offer shares to the public, it is performing well in terms of revenue production – reporting more than $1 billion in 2017.

Peloton’s rivals operate on different business models, but they are still considered competitors in the fitness equipment and service industry.

Peloton's management team

There are 46 members on Peloton’s management team. The key players are:

John Foley Co-founder and chief executive officer
William Lynch President
Jill Woodworth Chief financial officer
Tom Cortese Co-founder and chief operations officer
Hisao Kushi Co-founder and chief legal officer
Kevin Cornils Co-founder, chief technology officer and chief innovation officer
Yony Feng Senior VP Culture
Mariana Garavaglia Chief people officer
Tim Shannehan Chief revenue officer
Jennifer Cotter Chief content officer
John Adee Chief supply chain officer

What is Peloton's business model?

Peloton, founded in 2012, makes fitness equipment for home use, and supplies training sessions over the web. Users can buy a Peloton bike or treadmill and participate in live classes over the internet. There are also pre-recorded classes that can be downloaded on demand. Peloton makes money through equipment sales and its subscription model, where it charges users a monthly fee to access fitness classes. There are also physical Peloton locations, where users can get the Peloton experience in a studio environment.

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How do IPOs work?

IPOs happen when a company decides to sell its shares to the public. IPO is short for ‘initial public offering’. When a company decides to do this, it will decide how many shares it wants to sell and then a valuation is conducted by an investment bank. Then, an initial share price is released, and the public can start buying and trading shares.

You can learn more about IPOs in this video.

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Could I make a profit from the Peloton IPO?

You could make a profit from the Peloton IPO if you trade or invest in Peloton shares. If you trade using CFDs or spread bets, you can profit from upward or downward price movements. If you buy the shares (invest), you can profit if the share price goes up.

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1Based on revenue excluding FX (published half-yearly financial statements, June 2019).

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