Peloton
- Buzzy indoor fitness startup Peloton filed for its initial public offering on Tuesday.
- In its S-1 filing, the company laid out a series of "Risk Factors" – a list of the potential issues that will face as it grows and becomes a public company.
- In these, it addresses the increasingly saturated fitness market, growing competition, and a management team that has limited experience running a public company.
- Here are the key issues it could face.
- Visit Business Insider’s homepage for more stories.
Buzzy New York high-tech fitness company Peloton filed for its initial public offering on Tuesday.
To begin that process, it had to publicly disclose a trove of information about itself that was previously rumored or outright unknown in an S-1 filing.
In a section labeled "Risk Factors," Peloton detailed the major issues that it believes it could face. Here are some of the biggest issues:
Its losses are spiraling and could get worse
Peloton
Peloton saw its losses nearly quadruple over the course of a single fiscal year, from a $47.9 million net loss in 2018 to a $245.7 million net loss in fiscal 2019 and according to the filing, this could only get worse:
- "We have incurred operating losses in the past, expect to incur operating losses in the future, and may not achieve or maintain profitability in the future."
- "We will incur additional legal, accounting, and other expenses that we did not incur as a private company. These efforts and additional expenses may be more costly than we expect, and we cannot guarantee that we will be able to increase our revenue to offset our operating expenses."
And if its revenue does not grow at a greater rate than its operating expenses, it will not be able to achieve and maintain profitability, it said.
The fitness market is becoming increasingly saturated
Alli Harvey / Stringer / Getty Images
The fitness and wellness market has become increasingly saturated. Peloton not only has direct competitors in the indoor cycling industry, such as Flywheel and SoulCycle, but also contends with every gym and boutique fitness concept, and the great outdoors.
- "We face significant competition in every aspect of our business, including at-home fitness equipment and content, fitness clubs, in-studio fitness classes, and health and wellness apps."
- "We expect the competition in our market to intensify in the future."
- "If our market… becomes saturated with competitors, or if our products and services do not achieve market acceptance, our business, financial condition, and operating results could be adversely affected."
And if it doesn’t keep up with trends or if competitors introduce similar offerings faster, it’s likely to lose out.
Home fitness is still a new concept and there’s no guarantee it will take off
Peloton
The connected home fitness market is still new and "largely unproven," the filing said, and it’s unclear as to whether it will sustain high levels of demand or become the workout of choice for many people:
- "If it does not continue to grow, grows more slowly than we expect, or fails to grow as large as we expect, our business, financial condition, and operating results may be adversely affected."
Moreover, educating consumers on these new products and services requires "significant" investment, it said.
See the rest of the story at Business Insider
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Source: Business Insider – feedback@businessinsider.com (Mary Hanbury)