The valuation of stationary bike manufacturer and fitness classes streamer Peloton exceeded $4b in its latest funding round. Setting the absolute figure aside, the valuation more than tripled since the preceding fundraising 14 months ago. TCV led this latest round, joined by former backers Fidelity and NBCUniversal, among others, while new participants included Felix Capital and Winslow Capital. The funds are to be used for international expansion, commercialization of futuristic treadmill and openning five retail locations in the UK this fall.
Peloton is known for selling $1,995 spinners that beam to the internet and play thousands of live and pre-recorded fitness classes on their attached screens. On top of the upfront payment, customers are charged $39 a month to participate in the virtual spin classes or stream videos from company’s numerous personal trainers. The company is also an active merchant – t-shirts, yoga pants and spin paraphernalia are sold online and in retail locations across the US. Unsurprisingly, given products’ popularity and price-insensitive customer base, Peloton is already profitable.
SORTIS view: While Peloton’s trajectory more than impresses, the battle is far from over. Low entry barrier and lucrative clientele are attracting even more competitors, while what’s viral today is not necessary what’s relevant tomorrow. Flywheel, Echelon and SoulCycle are just a few names after Peloton’s market. Weighing risks and opportunities, we doubt the capital markets will be overly excited about Peloton.
