Peloton has taken the professional spin studio and brought it into people’s homes. This fitness tech startup produces smart bike trainers and treadmills. It also keeps users hooked by live-streaming workouts led by professional trainers. Anyone with Peloton equipment and membership can follow from home.
Analysts point to Peloton’s virtual workouts as disrupting the traditional gym membership. Rather than pay for a gym membership every month for access to exercising equipment, you own your equipment and get access to fitness classes on-demand at home. The company has been wildly successful with more than 1.4 million sales to date.
So is right now a chance to add Peloton to your portfolio before the stock price makes a big move upwards? In this guide, we’ll walk you through the steps to buy Peloton stock and explain why you might want to invest in this fitness startup today.
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Buy Peloton Stock in 3 Quick Steps
Want to buy Peloton stock right away? Just follow these 3 quick steps:
Step 1: Find an online broker
Choose a brokerage that gives you access to stocks on the NASDAQ.
Step 2: Deposit money
Deposit money in your account to start trading. Use a bank transfer, e-wallet, or credit card.
Step 3: Buy Peloton stock
Search for Peloton stock, specify how many shares you want, and hit ‘Buy.’
Where to Buy Peloton Stock?
In order to buy Peloton stock, you’ll need to have an account with a licensed stock broker. If you’re using an online brokerage, make sure it offers access to trading on the NASDAQ stock exchange.
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How to Buy Peloton Stock from eToro
eToro is one of our favorite trading platforms for buying Peloton stock. You can set up a trading account in minutes, trade fractional shares, and own stocks outright.
Once you’ve created an account with eToro, follow these simple steps to buy Peloton stock.
Search for Peloton Stock
eToro offers trading on hundreds of US stocks. The easiest way to find Peloton is to search for it in the search bar at the top of the page. Enter ‘Peloton’ or ‘PTON’ and click on the stock when it appears in the drop-down menu.
Step 2: Click on ‘Trade’
Once you’re on the Peloton stock page, eToro will present a fair amount of information about the company. To create an order form, click the ‘Trade’ button at the top of the page.
Step 3: Buy Peloton Stock
The order form you see is what you’ll use to tell eToro how much Peloton stock you want to buy. By default, eToro uses dollar amounts since you can buy fractional shares. But, you can buy a specific number of shares by using the ‘Units’ button next to the amount box.
You may also want to set a stop loss at this time; a stop loss is a price below the current market price. If the trade goes bad and the stock drops to this price, eToro will automatically sell your shares to exit your position. Stop losses are one of the best ways to limit your losses in case an investment doesn’t go the way you planned.
Why Invest in Peloton?
Peloton has performed relatively well since the company went public in 2019, but it’s still early in the stock’s history. This company has a lot of room for growth, and according to many analysts, it could become a major player within the fitness industry.
Let’s take a closer look at the bullish case for Peloton to help you decide whether it’s a worthwhile investment.
Peloton is a Brand
Peloton has directed a significant portion of its revenues towards marketing campaigns since the company’s inception, and that investment has largely paid off. In the eyes of users, Peloton is more than just an alternative to the gym. It’s a lifestyle and a brand that they’re excited to be part of.
That brand appeal is a big part of the recipe for how Peloton has amassed so many users so quickly. When people are excited about a company, they tell their friends, essentially serving as ambassadors and paid users for Peloton at the same time.
Wide Margins on Equipment
One of the best things about Peloton from the investor’s perspective is that the company is selling stationary bikes for more than $2,000 and treadmills for more than $4,000. That’s an absolutely massive markup, and Peloton’s branding and marketing is ensuring that people are more than happy to pay these prices.
In fact, Peloton reported gross margins of 40.5% for its equipment sales last quarter. That kind of margin is rivaled by very few public companies, among them the vaunted Apple.
Thanks to this revenue stream, Peloton has been able to fuel its marketing blitz, bring on professional coaches to teach its classes, and position itself as a higher-end alternative to the typical gym membership.
Excellent User Retention
The fact that Peloton sells its fitness classes as a subscription rather than include them with the equipment is the real genius behind this company’s business model. Even after keeping a 40% margin on equipment sales, Peloton continues to bring in revenue in the form of annual subscriptions.
Even better, the subscription model is scalable. As Peloton grows, it can serve a much larger user base without actually having to develop more workout classes and pay more trainers. More people may be using Peloton’s classes, but each individual user is only going to be doing one or two workout classes per day at most.
In addition, Peloton’s branding and the revenue from its equipment pay dividends again when you look at the company’s user retention. Peloton lost a measly 0.74% of its user base in the first quarter of 2020. By comparison, Netflix has one of the best retention rates in the streaming service industry, and the company still loses around 40% of its users after two years.
Peloton’s ability to establish itself as a brand is part of the key here. Not only are people telling their friends about the service, but they’re sticking with it themselves.
On top of that, the very fact that Peloton’s bike and treadmills are so expensive plays to the company’s advantage. After someone spends $2,000 on a stationary bike, they want to get their money’s worth!
Expect to see this user retention rate continue into the future since Peloton’s positive reinforcement for users should only get stronger as the company expands to include individuals’ friends and family.
Every industry has been affected by the Coronavirus, most of them negatively. But while the rest of the fitness industry has been closed for months with no reopening in many areas, Peloton is forging ahead. The company’s at-home fitness model with classes led by live-streamed, remote trainers is perfectly suited to the Coronavirus era.
That’s a big part of the reason why Peloton stock has actually seen a price bump since the start of the pandemic. People stuck at home are increasingly looking for ways to get their exercise in, and Peloton offers a ready-made solution. The company has also gotten plenty of free marketing since it’s appeared consistently in the news as one of the few public companies that could emerge from the crisis stronger than before.
Even as a “new normal” develops, most analysts expect that at-home fitness like what Peloton offers will remain significantly more popular than it was in the past. That bodes well for an acceleration in Peloton’s user growth, meaning more equipment sales, more subscription revenue, and more users serving as ambassadors for the brand.
All that said, it’s worth noting that Peloton still isn’t profitable. The company reported a first-quarter 2020 loss of $0.17 per share, and Peloton’s C-suite continues to tell investors that it won’t be profitable anytime this year.
That’s a red flag, but it’s arguably not one that’s going to stop this stock from growing. In today’s tech-heavy market, profitability and stock price seem to be two totally different things. Already, most analysts are rating Peloton a ‘buy’ despite the negative bottom line.
On top of that, most of Peloton’s expenses are coming not from the cost of its service, but from marketing. With all the attention the company is getting during the coronavirus pandemic and through word of mouth as its user base grows, Peloton may be able to scale back on marketing and still accelerate growth in the future.
While it’s always a risk investing in unprofitable companies, Peloton is one of the few companies for which turning a blind eye, for now, seems pretty justified.
About Peloton Stock
Peloton was founded in 2012 as a New York City-based fitness tech startup. While Peloton originally only offered subscription spin classes, the company introduced its own exercise bike in 2014 and its own treadmill in 2018.
This turned out to be a good move for the company, as it turned out that many fitness class users appreciated having their own equipment. Peloton has increasingly attracted users from competitors like SoulCycle, which charges by the class rather than on a membership basis.
Since 2012, Peloton has raised nearly $1 billion in private venture capital. The last funding round took place in 2018, about one year before it’s IPO, when it raised $550 million at a valuation of $4 billion. Peloton went public in 2019 at a valuation of $8 billion, corresponding to a share price of $29.
After a rocky first month of public trading, Peloton was consistently trading above its IPO price. The company’s stock price dropped significantly in early March 2020. However, this had less to do with the coronavirus pandemic than the fact that the initial lock-up period after the IPO came to an end and many long-time employees sold shares.
The price quickly recovered, as bulls took this as a buying opportunity, and Peloton is now trading around $38 per share. That’s close to analysts’ price targets for the stock, which range from around $30 to $45 per share.
Should I Buy Peloton Stock?
Peloton is a high-quality company with a lot of room for growth. The company has positioned itself as a brand that users are excited about and loyal to, which bodes well for user growth.
On top of that, despite all of Peloton’s growth to date, the company still has plenty of room to steal market share from both direct competitors like SoulCycle and from traditional gyms. This expansion could be accelerated by the Coronavirus pandemic, as more and more people look for options to workout from home.
While the company is fresh off a big jump in the stock price, it could still have a lot of room to run. Peloton’s price now is based on an assumption of future profitability, but the stock price could easily soar if the announcement of a positive bottom line comes sooner than expected.
Along those lines, the company should be able to cut back on its marketing budget as Peloton’s footprint in the workout culture grows. Accelerated word-of-mouth expansion may be all it takes for Peloton to report a quarterly profit.
Peloton has made waves in the fitness industry by pairing high-end exercise bikes and trainers with professional live-streamed workouts. Through an intensive marketing campaign, the company has established a loyal following that promises to help expand its user base into the future. Peloton isn’t yet profitable, but that means there’s still time to get in on the ground floor of this stock.
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What is the ticker symbol for Peloton stock?
Peloton trades on the NASDAQ stock exchange under the symbol ‘PTON.’
Does Peloton pay dividends?
Peloton is not profitable and does not pay dividends. It’s unlike that the company will pay dividends in the future, since this is not standard practice among tech companies.
Does Peloton have any major competitors?
Peloton competes with spin class companies like SoulCycle, which recently announced the introduction of its own exercise bike. Peloton also loosely competes with the traditional gym industry, as many gyms are offering in-person spin classes for their members.
Do users need a Peloton bike or treadmill to get a membership?
Although Peloton recommends its own equipment, it’s not required. This is where Peloton’s high equipment margins can actually hurt rather than help the company. Several companies are introducing spin bikes designed for use with Peloton exercise classes, but that undercut Peloton’s equipment on price.
Is Peloton only available in the US?
As of May 2020, Peloton is available in the US, Canada, the UK, and Germany. The company will only ship bikes and treadmills to these countries, although it is possible to access live streamed workouts from around the world.