I know nothing about the financials but the Peloton digital app part of Peloton has some huge growth potential. This is the subscription service part and you can subscribe without buying the bike. Its not just the spin classes, they’ve already branched out into yoga, and on the road running workouts. Peloton Digital has the potential to be the TR of EVERYTHING that “normal” people do for fitness. And that is a huge market. Peloton is not out to just replace your spin class, their aim is to replace all your fitness classes and help you PR your next 10k run too.
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Bankers and the media love to talk about success being a big pop on day 1.
From the company’s perspective, this was a very successful IPO.
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I don’t want to completely disagree with the other comments on here, but I did want to say three things:
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Only @Nate_Pearson and his team really know, but I think some of the active forum members have some self-selection bias as to the typical TR demographic. The people active on here tend to be avid cyclist, many of whom actually race. They go back and forth on the forums, and it starts seeming like everyone on TR is (the echo chamber). I think there are a lot of us who aren’t. TR is one of three types of workouts I do every week. I chose it because I want to be fit, I want to be able to track my performance / improvement with real numbers, and I hate running for cardio. Peleton was something I considered. I chose TR because the analytics were better. I also chose it because I already owned a road bike. Finally, I chose it because I have some friends that go on weekly bike rides, and I like going with.
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@Nate_Pearson, @chad, and the team at TR had a goal - help cyclists get faster through structured training. A lot of the comments here seem to suggest that doing that and serving the “get fit” crowd are mutually exclusive. I’d like to suggest that they aren’t. Let’s not forget, Peleton users are on a bike. TR users are on a bike. The equipment is similar. Peleton users pedal for a workout. TR users pedal for a workout. The movement is similar. The dissimilarity is in the kinds of workouts (self explanatory), the workout environment (social), and TR’s explicit goal (get faster, which I do think Peleton does help with, albeit less). There is no reason that TR could not incorporate the workout environment (TR workouts being based on percentage of FTP and the abundance of smart trainers to control resistance all work in favor of that) while maintaining its superior workouts and explicit goal. While we on TR want to feel “different” or even “superior,” we don’t need to. We can all be a part of the cycling community, Peleton riders included.
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This gets me back to the original question: what does Peleton’s popularity and IPO mean to TR. I think it means several great things. First, let’s all admit that TR does have, as two of its many goals, to make money and expand. With that in mind, I think Peleton’s public listing and success in expansion should partially guide TR’s plans going forward. How can TR get some of this market without sacrificing its main goal of making riders faster? Can TR emulate some of what makes Peleton successful without sacrificing its main goal? Are there partnerships TR could enter that would help with that? Is there a niche within the Peleton crowd that TR could go for without sacrificing its main goal?
Finally, I’d encourage us all not to look down on Peleton riders. Let’s not act like “getting faster” does not also involve “getting fit.” If Peleton people are just looking to “get fit,” let’s get them on TR to “get fit” while “getting faster.” I’d love to see the TR community grow, and the TR owners to make some more money.
Will
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Well, if you believe the hype it’s a compelling growth story. Revenue for each the '17,'18,'19 was 218.6MM, 435.0MM, 915.0MM. So that’s a pretty steep growth curve. They say they’ve sold 577k units in as of june '19 and they think their TAM (for US/Canada/UK/Germany) is something like 14MM. No idea what sort of penetration they think is realistic.
I’m just gonna say, though, that if you believe their numbers the US is already a shade less than 5% market penetrated. That already sounds a little toppy to me. Further consider at that lofty penetration number Peloton is booking 181MM in subscription revenue. So read that again and make sure you understand it: 80% of their revenue is non-subscription. Read: equipment sales.
I’m not sure that’s a trend that can continue long term in a 4.8% penetrated market.
Fully diluted there are more than 280MM shares outstanding post-offering. So let’s just use a top line multiple (since net, operating, and EBITDA margins are negative). How many times revenue would you pay for Peloton? If you say you think it’s worth a lofty 10x revenue multiple then you’d be looking at a ~32.50 price target. But if you think it’s worth more of a market multiple…yikes…that’s >80% downside from here.
So, sky-high multiple gets you 30% return. Market multiple gets you raped. That’s what I’d call an asymmetric risk profile. I feel like there are a lot less risky opportunities to chase a 30% return where the downside risk is a lot less likely and a lot less impact.
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The interesting take here is what happens to Wahoo now. As other commentators have noted, they have the best ecosystem for indoor cycling centric fitness. They have the head units, software and connected trainers. If they do start to get traction on that, the likes of Garmin who have a bigger brand but clearly flagged an interest in this with their Tacx purchase, will have to beef up their lineout. Tacx already have their video thingy going offering realworld climb, but not the training software. Would that put the likes of Zwift or TR in the sights for an A&M?
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I think a lot of people don’t know that Stages has been in the indoor cycling / spin market for YEARS now (with power). So in addition to their new fully integrated indoor bike, they have a massive knowledge base, business experience and customer base to draw on.
My understanding is that their power meter business is but a small piece of the pie.
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It does, but only up to a point. Training for performance is decidedly different than exercising for fitness. Performance is hard & (possibly) unhealthy. Fitness is easy and healthy.
As PTON’s own literature is rife with the word ‘fitness’, we can guess at their target market. I’m also guessing there is no World Wide Disaster Day among said demographic.
Peloton and TR are not competitors in my mind. TR is for cyclists, Peloton is for the masses who want a spin bike. I feel like Peloton is more of a Zwift competitor since they are both focused on social aspects, etc. but TR is a different animal.
I honestly did not know this. It is a bit discouraging to hear. As someone who is on TR to “get fit,” are there workouts I should be avoiding? Should I be tweaking anything? Am I just wrong, and TR as a whole isn’t right for me?
And I want to make sure we’re just talking about the workout side of “get faster.” I don’t want to include the other sides - diet, weight loss, etc.
If TR’s workouts are geared toward “get faster” at the expense of “get fit,” I may need another solution.
Will
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I agree with this, I don’t think the vast majority of peleton people with be thinking about becoming a cyclist, therefore they are not cyclists. That’s not some snobbish view I just don’t see it. They are trying to keep fit, not learn the skills and fitness required to ride outside.
Fair play to anyone trying to get fit by whatever means and if the two things overlap then who cares. But I’d wager that all TR users ride out on the road regularly (unless weather dictates otherwise), not sure what that % is of peleton users. Less than 5% maybe?
You shouldn’t avoid any TR workout! They will definitely all make you more fit!
Point is, it doesn’t take much exercise to get fit. 30min/day at <VT1 – the point where you start to breath heavy. To ‘get faster’, or more to the point of what TR users are after – to get fast – will take considerably more work, both in time and intensity. If you are looking to get fit, without chasing performance, TR is still a great place to accomplish that goal. It just means you don’t have to smash yourself silly doing some of those crazier workouts if you don’t want to. Ride & be happy!
TR has something for everyone whether you want to get fit, get fast, or both. That said if you’re going to only use one platform and don’t care about getting fast, use Zwift, but don’t use their abstractly designed training plans. Zwift free ride and group rides, etc. will be more immersive, interesting, and you can still get a great workout and get fit.
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My friend is a serious roadie/trail rider and used to race in his college days. He does indoor on a Peloton because his wife who is not a serious cyclist, wanted one, so he rolls with that, but for him its more about maintaining than building fitness, which the Peloton is just fine for
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Spinning is a registered trademark, and so when our gym got rid of Spinning bikes and upgraded to Stages SC3 indoor bike they renamed the classes “Cycle.” Our local gym has 19 locations in the metro area, and the gym near our house is one of the showcase gyms. We tend to have the most classes, here is the schedule for this week:
Sunday - 1 class
Monday - 4 classes
Tuesday - 5 classes
Wednesday - 4 classes
Thursday - 5 classes
Friday - 3 classes
Saturday - 2 classes
Thats a lot of cycling classes for one gym, and many are crowded! I’ve been to both 5:30am and some of the afternoon and weekend classes. There are a few outdoor cyclists but mostly its people trying to “get their cardio.” The Peloton message of “best cardio on the planet” is appealing to the cardio crowd. Having traveled and struggling to find cycling studios in other areas, it is clear I live in an area best described as a fitness bubble.
Point being, is that I see Peloton taking people out of the gym and into their homes. Or trying to compete with Stages and get their bikes into gyms or cycling studios (we have boutique cycling studios all over the area). Or get Peloton into hotels. Which at this point in Peloton’s lifecycle will have them competing for the gym / hotel fitness room against Spinning and Stages and Keiser to name just a few, and perhaps new players from traditional cycling companies like Wahoo and Wattbike and Tacx.
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Let’s be real. If you run into someone at a cocktail party who says they are interested in getting fit, are you really going to send them down the road of getting a trainer, paying $189.yr for TR, going through all the intricacies of the hardware and software set up. And then the killer, you have to explain FTP and how to test for it. TR is a two drink story. Or, are you going to suggest a Peloton which, while expensive, is basically plug and play? Peloton is both a better fit for the fitness crowd AND it does not take 20 minutes to explain. Any decent human will suggest the Peloton unless you’re talking to someone who is already a semi serious cyclist. And even for that person, you have to evaluate if Zwift might be a better fit for them.
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I would not recommend the Peloton to anyone because I think its an overpriced and archaic piece of technology. What I meant is if someone (like the person I replied to) is already on TR, there is no pressing need to jump ship and get a Peloton.
That said if someone is simply looking to get fit, there’s better ways to spend a few thousannd dollars than on a Peloton or a bike and trainer as well.
This was always a shortcoming of Spinning® in my opinion, since I am not a go to the gym to workout kind of person. They never had an “offline” option. No instructor, no class. They used to offer classes at a former workplace but the classes being regularly scheduled, they were frequently cancelled due to instructor conflicts/issues.
Don’t get me wrong, Spinning® has never gone the way of the dodo, but it was very much the way the fitness market goes, it was “the thing” in fitness for a while, only to be supplanted by the next big thing much in the same way pilates, zumba and others along the way have done.
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Yes, and what makes Peloton more interesting is they aren’t just cycling for cardio. A bunch of classes. That’s why I think their goal is to take market share from gym memberships.
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Just my two cents worth regarding Peloton’s success/growth:
I have never used Peloton and have no desire to do so, but I would hazzard a guess that a big part of their success is down to their adverts that pop up on youtube and elsewhere that show some healthy looking/sexy ladies motivating each other to get into shape. This along with their social media advertising and hype has driven the growth.
What i like about TR is that after i’m done the workout, i still have a bike i can take outside.
I spend all the money on Peloton and i’m still stuck inside.
So maybe this Peloton thingy will bring a bit more attention to the indoor cycling/indoor training scene temporarily. Maybe people will see that peloton is not for them and look for alternatives (like zwift, tr, sufferfest). But i don’t see peloton STEALIN tr users.
There’s some glamour around peloton that will not be seen with TR users. I associate TR more with grit. With the person in their not so good looking paincave chasing watts to get better for their races or tris.
Peloton i see it in a whole other light. It is a hard workout i’m certain but it’s just too… spinny to me. I’ve done some spin classes, a few different ones, and it’s just not the same. Too much distractions and bells and whistles.
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