IPO

Peloton Stock Backpedals, Closes 11.2 Percent Below IPO Price

Peloton, IPO, Stock, shares, valuation, digital fitness

Digital fitness brand Peloton ended its first day of trading down 11 percent from its IPO price of $29 a share, Marketwatch reported on Thursday (Sept. 26). 

At its IPO price, Peloton was valued at about $8 billion, or roughly double its private market valuation one year ago.

Despite the weak reception by investors, the company raised about $1.3 billion in the offering. Trading opened at $27 a share, giving Peloton a $7.7 billion valuation based on 286 million shares outstanding. 

“We obviously wish the stock traded better on the first day, but we’re in it for the long haul and are excited for capital to continue to grow our business,” Peloton chief financial officer Jill Woodworth told Marketwatch. 

Peloton did, however, surpass the $1.16 billion it set out to raise. 

The company, which sells fitness equipment such as stationary bikes and treadmills, filed its initial prospectus in August. While the company’s revenue is increasing, its losses are said to be broadening. 

Peloton reported that its sales increased from $435 million to $915 million in fiscal 2018, and its 2019 net loss broadened to $245.7 million from $47.9 million the year before.

Peloton was reportedly the first to combine bikes and treadmills with screens that allow users to take part in fitness classes with others from their own locations. Per past reports, the company aims to enable people to have an at-home workout experience “as physically rewarding and addictive as attending a live, in-studio class.”

Peloton’s subscription base went up to 511,202 from 245,667 in one year. The company has said in the past that it has 1.4 million members. Active users do seem to use the service consistently and actually increase their workout frequency. Subscribers who participate regularly complete an average of 11.5 workouts a month, marking an increase from 8.4 last year and 7.5 two years ago. The company said it has had a 95 percent retention rate of fitness subscribers since 2016.

 

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