In a recent CNBC video, where Mad Money host Jim Cramer interviewed Peloton Chief Executive Officer John Foley, the host cited descriptions of the software/fitness disrupter as the "Netflix for fitness." Cramer described Peloton, a privately held firm, as a "way to mesh the stay-at-home economy with the healthy-living philosophy." The former hedge fund manager stated that Peloton is "taking the country by storm."
Peloton produces a high-quality stationary exercise bike that is completely integrated with a network allowing users to interact with others, as well as take part in virtual rides, simulated using both live and recorded video displayed on a monitor.
Classes are available, as well as races, which appear to be quite competitive. A wide range of statistics on the rider, as well as comparisons with other racers, are available. Jim Cramer says that Peloton is a "technology company" that includes a "social networking kicker."
Complete studio cycling experience, plus more
Speaking on Mad Money, CEO Foley, who previously worked with Barnes & Noble, Inc. (NYSE: BKS), described attending cycling classes with companies like Flywheel and SoulCycle, and said that the services offered "a great workout," stating that he and his wife "got addicted" to the experience. However, once the couple had children, they found making time to attending the studio cycling classes they enjoyed so much challenging.
This caused Foley to ask if there was a better business model; a way to allow consumers to take part in a similar experience, at home, on any schedule desired.
There are said to be over 4,000 classes available for users of the Peloton bike, which are said to number near 200,000. Foley insisted that the fitness and technology company, which was founded in 2012, is also a "media company." Peloton streams live content for 12 hours each day, giving owners a choice between live and on-demand classes.
The CEO explained that the Peloton business model is based on getting the equipment into the hands of users with a reasonable price, said to be near $2,000, and then generating profits from a $39-per-month subscription for "unlimited classes." Cramer, a financial journalist, stated that his wife keeps her Peloton bike in their bedroom.
Peloton stock offering on the horizon?
The Mad Money host then asked the CEO if there was a Peloton stock offering in the works. John Foley responded that "eventually" shares will be available publicly and that the firm intends to "capitalize this thing to be very aggressive." He described Peloton as a "massive opportunity," but noted that competition is likely in the future. Foley explained that Peloton distinguishes itself, because it is a "hardcore technology company" that produces tablets "better than Apple." The CEO expressed doubt that SoulCycle or Flywheel would be able to easily replicate Peloton's technological capabilities.
Last June, Lisa Klinger, the chief financial officer with Peloton, who has been involved in previous public stock offerings, was asked by Bloomberg with regard to the potential for a Peloton stock offering.
At the time, Klinger stated that it was "anybody's guess," and underlined the fact that the company was focused on "growing its business model," adding that, while Peloton doesn't officially operate outside the United States, it had registered "riders" in 22 countries.
