Peloton to raise as much as $1.3 billion in IPO, shares priced $26 to $29

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Peloton, the buzzy maker of expensive internet-connected stationary bikes and treadmills, is sprinting towards an IPO that would award it a rich, $8 billion valuation, double the level the money-losing company was valued at just one year ago.

The offering, expected in the coming weeks, would allow Peloton to raise as much as $1.3 billion, according to its latest S-1 document, filed with the SEC on Tuesday.

Peloton’s ambitious IPO plans come at a time when another high-profile company — office sharing company WeWork — has faced brutal scrutiny after launching its IPO process and has reportedly had to slash the price it expects its shares to fetch.

The two New York-based companies have a lot of similarities, including controversial capital structures that concentrate the voting control among insiders as well as spiraling losses. Peloton has posted a net loss every year since its founding in 2012, though its $539 million in cumulative red ink is significantly below the nearly $2 billion that WeWork lost in just the last year alone.

Peloton plans to sell 40 million shares of its Class A stock to public investors, priced somewhere between $26 a share and $29 a share. The company said the underwriters of the IPO would have the right to purchase an additional 6 million Class A shares.

The IPO would value Peloton somewhere between $7 billion and $8 billion, depending on where the shares price. That’s a significant step up from Peloton’s last valuation in the private markets in 2018, when venture investors pegged its worth at $4 billion.

According to Bloomberg, the company and its bankers could kick off the roadshow on Wednesday to pitch the offering to investors.

Founded in New York in 2012, Peloton sells $2,000 internet-connected stationary bikes, as well as pricey treadmills. Customers also pay anywhere between $19 and $40 month for access to specially produced live exercise classes.

The company boasts that its “churn rate,” the portion of subscribers who cancel service, is extremely low. But according to customer-retention experts that Business Insider has spoken to,Peloton’s reported churn metrics are significantly understated.

Peloton, which lost roughly $246 million in fiscal 2019 despite fast growing revenue, plans to trade on the Nasdaq exchange under the “PTON” ticker.

2019-09-10 21:42:15

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