Makers of $2k subscription spin bike Peloton are raising $550m in funding — their last, according to CEO John Foley, before an IPO expected next year.
The new financing will more than double the cash in Peloton’s handlebar basket and put the 6-year-old company at a $4B+ valuation.
What differentiates them from other trendy fitness franchises like, say, SoulCycle (valued around $1.2B)?
Rather than relying on swanky gyms and locker rooms filled with Keel’s body lotion, Peloton has cracked the holy grail of subscription media.
Stay in, work out
Peloton doesn’t just sell a high-end, proprietary spin bike. It also sells $39/month subscription workout classes streamed live by trainers at their HQ straight to monitors attached to the bikes.
That gives Peloton up-front capital from new customers to reinvest in their business, plus recurring revenue that they can scale via new workouts and programs like stretching, yoga, and strength training.
And the best part? They can enter new markets around the world, without having to invest in brick-and-mortar gyms.
Just keep spinning
According to Peloton co-founder and CEO John Foley, Peloton is on pace to pull in over $700m in revenue this year — 100% year-to-year revenue growth from last year.
The company could reportedly lose money in the second half as it prioritizes expansion, including a 35k-square-foot production studio in Manhattan, a 25k-square-foot customer support center in Texas, and — of course — a $4k connected treadmill.