John Foley, CEO of Peloton.
Adam Jeffery | CNBC
Peloton, the company that brings spin classes to your living room, has made the combination of fitness and connected things into a business big enough for the public markets.
In its IPO prospectus published on Tuesday, the manufacturer of stationary bicycles and treadmills at home attributes growth – more than 100% over the past year – to the "growing awareness of the benefits of exercise and physical activity." The company said that over the past two decades, even in times of recession, the fitness industry has grown in the United States and abroad.
But Peloton suffers from the same deficiency that plagues other digital health products and services such as activity trackers, personal training apps and fitness classes. It does not actually move the needle when it comes to the country's health.
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The Peloton bike costs more than $ 2,200 for the most basic package, and it does not include the monthly fees for classes. It is far out of reach for millions of Americans who live paycheck for paycheck. For the company to have a real impact on the health crisis, it must come not only urbanites who love convenience, but also those sections of the population who are most in need of user-friendly fitness centers.
Peloton isn & # 39; Don't try to fool anyone about the target market. The company was mocked earlier in the year in a viral tweet thread that piqued the fun of its ads, which are clearly aimed at the affluent.
Robin Arzón, Vice President of Fitness Programming at Peloton
Photo courtesy of Peloton
"These models are expensive and exclude many people," said Iyah Romm, CEO of Cityblock Health, a city health initiative focused on low-income communities. "And that's the question of whether it's even related to different populations."
Peloton has more than 500,000 customers using its paid subscription service, up from just over 245.00 a year ago. Revenues rose to $ 915 million in the 12 months ended June 30, up from $ 435 million the year before.
"We believe that busy lifestyles, less leisure time and changing household dynamics are driving demand," Peloton said in the filing.
Low-income people also fit these categories, but they simply cannot afford the services. And Peloton, which is already losing money, needs to put even more emphasis on its profit margins when it comes to attracting public market investors.
"We have inadvertently designed a community where it is difficult to be healthy," said Steve Downe, chief technology and strategy manager for the Robert Wood Johnson Foundation. "So many of the solutions are not available to most people."
SE: Peloton files for listing under ticker PTON