Month/Year of Graduation

5-2019

Degree Name

Bachelor of Science (B.S.)

Department

Economics

First Advisor

Dr. Erin Miles

Abstract

Peloton is a highly successful company. The fitness industry is growing steadily. People are becoming more and more aware of their health and how exercise can help them live better as well as longer leading to the growth we have seen. The at home fitness industry has increasingly become about personalization and taking everything that was originally in a fitness center and putting it in a customer’s home.

While delivery drivers are under stress at Peloton, Peloton finds itself in great grace with a high valuation and a cult-like following. Peloton has made its money off high margins on its bikes and is growing its subscription base majorly. Its valuation expected to near $8 billion by the end of 2019 and it streams a significant amount of content on a daily basis that allows its fans to enjoy new programs every day.

Peloton now faces the difficulty of trying to stay at the top as competitors attempt to take their market share. Peloton also must decide what to do with the cash it is expected to raise in its IPO at the end of 2019.

I suggest that Peloton use the IPO money to bring down its delivery time from one week to three days. I then suggest that they expand towards its subscription model which potentially could post higher revenues than its physical business over time. I suggest that they aim to expand into the running workouts, the cross training/cross fit, and finally the yoga/pilates. Expanding into these areas will create a sustainable competitive advantage for Peloton. Any company attempting to copy them will need to create a large library which requires significant resources.

Peloton is in great shape and with some strong decisions, can continue to enjoy a top spot in the growing at home fitness market.

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