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Peloton goes public: how to trade Peloton’s IPO?

Contracts for difference are a popular and effective way to trade stock markets. With Capital.com you can trade Peloton shares through CFDs without the need to actually buy them.

Once Peloton has officially listed its shares through an IPO, Peloton stocks will become available for trading at Capital.com. You will get the ultimate opportunity to trade Peloton’s IPO with contracts for difference (CFD), speculate on Peloton value and try to benefit from the movement of PTON stock.

On the wave of underwhelming IPOs – read Uber or Lyft – it may be difficult to make predictions about Peloton’s valuation. It's especially hard to anticipate how its shares will move post-IPO.

By using CFDs, you have a chance to profit from both the upswings and declines in Peloton’s stock price: you can hold long or short positions, depending on whether you believe that the price will go up or down.

One of the major advantages of trading Peloton IPO with contracts for difference is leverage. It means that you will be able to open significantly larger positions with a smaller initial capital. However, you should always remember that leverage may augment your profits as well as increase your losses.

Peloton IPO date:
when will Peloton go public?

Despite the fact that a famous home exercise startup shared its plans to go public several months ago, the official date for Peloton’s IPO has not been set yet.

However, Peloton’s offering is likely to contribute to a strong year for big tech IPOs. According to Bloomberg, a combined $39 billion has been raised in 125 listings on the U.S. exchanges in 2019 so far. For now, it’s the best year for IPOs since 2014, when Alibaba Group Holding Ltd. set the all-time record with an offering of $25 billion.

Peloton is going to list its shares on the NASDAQ stock exchange under the ticker PTON. Goldman Sachs and JPMorgan Chase are the leading underwriters for Peloton’s offering.

What is Peloton's valuation?

The latest funding round gave Peloton a valuation of $4.15 billion, but recent reports suggest the startup may go for an $8 billion valuation for the IPO.

However, considering the mixed performance of big tech IPOs this year, including the disappointments of Uber and Lyft, many share the view that Peloton will likely come at the lower end of the range.

Peloton Interactive will go public with a dual-class voting structure. It means that out-sized power will be in the hands of the management.

Why is Peloton going public?

A fitness startup with a cult-like following, Peloton is getting closer to its initial public offering as it filed its S-1 last week. So, why is the company going public?

Despite $915 million in sales, Peloton has a lot of expenses. The company is building showrooms for its products around the world and is gradually expanding its team. All of that comes at a cost.

According to the company’s prospectus, it is aiming to rapidly grow its membership base through the sale of innovative connected fitness products, continuing to retain and engage its loyal and growing membership.

Peloton’s major goals include the following:

  • Grow brand awareness
  • Improve membership experience
  • Launch new products and enrich content offering
  • Expand into new geographies
  • Increase profitability

Is Peloton profitable?

Like many other companies going public, Peloton is still unprofitable, even though its revenue more than doubled to $915 million in the FY 2019 from $435 million last year.

According to the company’s filing, it lost $196 million in the 12 months ended 30 June 2019. Proportionally, this is comparable to their $48 million loss over the same period last year.

Moreover, the company has to resolve a $150 million lawsuit, filed by the music industry publishers. They are accusing Peloton of using 1,000 music tracks in their fitness programs without a license. The litigations might take years to resolve.

Another important issue to consider is that 42% of Peloton’s orders are delivered by third-party suppliers. Although the company charges an obligatory $250 fee for a "professional in-home delivery and assembly," it gets numerous complaints from customers for incomplete and incorrect services. Such inconsistent customer experience may damage Peloton’s reputation in the long run.

One more threat is stemming from the ongoing U.S.-China tariff war, as Peloton orders some parts for its products from China. According to Peloton’s official comment "These tariffs have an impact on our component costs and have the potential to have an even greater impact depending on the outcome of the current trade negotiations."

What is Peloton?

Founded in 2012, Peloton is an interactive fitness platform provider, producing connected fitness equipment for homes with complimentary training sessions over the web.
Peloton’s management describes it as a "technology company that meshes the physical and digital worlds to create a completely new, immersive, and connected fitness experience."
Peloton’s flagship product is Peloton Bike — an indoor fitness cycle, allowing users to take up studio spin classes from home. The offering includes more than 20 daily live classes over the internet and thousands of on-demand classes, pre-recorded by Peloton’s group of trainers.

Peloton Fast Facts

1.4M
Total members
55M+
Total workouts in FY 2019
$915M
Revenue in FY 2019
95%
12-month retention rate

What is Peloton’s business model?

In its IPO filing, Peloton describes itself as “the largest interactive fitness platform in the world.” With more than 1.4 million members, Peloton sells exercise bikes and treadmills, connected to TV screens and the Internet, offering its own training programs. The startup’s “connected fitness” subscription costs $39 per month and its bikes start at $2,000.

Historical Performance

Connected Fitness Subscribers (thousands)
Total Revenue (millions)

Often referred to as the “Netflix of fitness,” Peloton can also be described as a subscription-based fitness company.
Speaking about future business opportunities, Peloton estimates that roughly 67 million households across the globe are interested in subscription-based fitness services.

What is an IPO?

An initial public offering is the process by which a company lists its shares for public trading. The company decides how many shares it is going to offer, and an investment bank typically estimates the initial price of the stocks based on supply and demand. After the company’s shares are listed on the stock exchange under a particular ticker symbol, these shares can be publicly traded.