Take a recovery day... Peloton shares fell 11% after they began trading on IPO day. The interactive fitness platform likes to "sell happiness" — but it mainly streams spin classes to 1.4M able-bodied humans averaging 12 rides/month. That large engaged audience attracts top spin instructors who bump Rihanna to get you up the hill in 3rd position. Here's how it makes money:
- Hardware: $2,245 spin bikes with screens.
- More hardware: A newer $4,295 treadmill they call Tread.
- Software: You drop $39/month to subscribe to all those hill-climb classes and accompanying playlists.
"We're 6 or 7 companies in one"... CEO John Foley's words, not ours. Peloton stretches itself out to include multiple industries, and it's proud of that. But business model hybridization makes it harder for investors to understand what they're buying:
- Is it a media company like Netflix? It's got original video content.
- Is it a hardware company like Apple? It's got fancy devices.
- Is it a tech company like Spotify? It streams music.
- Or is it a fitness company like Planet Fitness?
- Peloton's IPO filing document (its S-1) brags it's all of them* — plus apparel, logistics, retail, and design.*
So was the Peloton IPO a success?... Yes for the company, no for investors who bought shares yesterday. Even though the stock price dropped, IPOs aren't only about the trading of new shares. They're used to raise a new round of funding for the company — and Peloton pocketed over $1B from the new shares it issued, more than it first expected. (Listen to our pod for a lot more).