BPS 4305 at The University of Texas at Dallas with Dr. Livia Markoczy

1. Running head: PELOTON ANALYSIS 1
Company Analysis: Peloton Interactive, Inc.
Berkley K. McFarlin
The University of Texas at Dallas
April 13, 2020
BPS 4305.003
Professor Livia Markoczy, Ph.D.

2. PELOTON ANALYSIS 2
Table of Contents
Company Analysis: Peloton Interactive, Inc. ......................................................................4
Financial Analysis ...............................................................................................................4
Financial Health...............................................................................................................5
Strength Relative to Competitors ....................................................................................5
Boutique brands...........................................................................................................6
Big gyms......................................................................................................................7
External Analysis.................................................................................................................8
Porter’s Five Forces Model .............................................................................................8
Bargaining power of buyers. .......................................................................................8
Bargaining power of suppliers.....................................................................................9
Rivalry among competitors. ........................................................................................9
Threat of new entrants...............................................................................................10
Threat of substitutes. .................................................................................................10
External SWOT Analysis...............................................................................................11
Opportunities. ............................................................................................................11
Threats. ......................................................................................................................11
Internal Analysis................................................................................................................11
Value Chain Analysis.....................................................................................................12
Primary activities.......................................................................................................12
Support activities.......................................................................................................14

3. PELOTON ANALYSIS 3
Internal SWOT Analysis................................................................................................15
Strengths....................................................................................................................15
Weaknesses................................................................................................................16
Strategic Problems.............................................................................................................16
COVID-19 Pandemic ....................................................................................................16
Competitive Threats ......................................................................................................16
Stock Price.....................................................................................................................17
Recommendations .............................................................................................................17
Response to the COVID-19 Pandemic..........................................................................17
Optimize Competitive Opportunities ............................................................................18
Increase Stock Price ......................................................................................................19
References .........................................................................................................................21
Tables.................................................................................................................................24

4. PELOTON ANALYSIS 4
Company Analysis: Peloton Interactive, Inc.
Founded in 2012, Peloton Interactive, Inc. is an innovative, multi-faceted company
known for its at-home exercise products and streaming service. A detailed analysis of Peloton’s
financial health, external opportunities and threats, internal strengths and weaknesses and
strategic problems was based upon thorough research of current events, business and news
articles, company resources and market insights. The industry landscape is ever-changing, and
Peloton is facing real-time challenges surrounding its 2019 IPO filing and the 2020 novel
coronavirus pandemic. Provided at the conclusion of this analysis are three strategic
recommendations for Peloton going forward.
Financial Analysis
Peloton Interactive, Inc., trading under the symbol “PTON,” filed an IPO six months ago
on the NASDAQ stock exchange. Though the company maintained a unique competitive
position and high revenues in comparison to competitors year over year, Peloton’s stock price
fell after its Wall Street debut and only narrowly surpassed its IPO value just this week. Peloton
is financially healthy on its balance sheet, but income statements reveal net losses each year
since 2017. It is uncertain as to why the firm incurs operations expenses and costs of revenue that
exceed sales rather than cutting spending to better balance its income statement, but the firm may
be investing more in the potential for long-term growth than it is for short-term profitability. This
would justify increased costs in recent high-growth years in order to ensure the company
establishes itself as a reputable, innovative, attractive brand with a dominant market share.
Achieving this obejctive may involve high levels of spending in operations, marketing and sales
and could explain Peloton’s cost/revenue imbalance.

5. PELOTON ANALYSIS 5
Financial Health
One notable metric of Peloton’s income statement is the net loss they’ve incurred over the past
three years.1
Their cost of revenue and operating expenses are similar in scope, with operating
expenses exceeding cost of revenue in most recent years. However, their sales are 45% above
that of their closest public competitor, Planet Fitness, and far surpass the 2015 revenues of
SoulCycle, as stated in their unsuccessful IPO file (albeit, four years’ difference should be taken
with a grain of salt) (SoulCycle, 2015). This denotes increased popularity of Peloton’s products
and services over that of competitors; however, prolonged net losses warrant concern for the
firm’s longevity. Peloton’s solvency is healthier than that of its closest competitor, Planet
Fitness, as indicated by the possession of more assets than liabilities. Thus, Peloton is poised to
be able to manage their debt more effectively than Planet Fitness. Peloton has a current share
price of $31.99 (Peloton Interactive, 2020), which has only recently surpassed its IPO price of
$29. Analysts fear the “unprofitable company is struggling to win over investors,” but
acknowledge the company’s notable victory in filing an IPO before many of its boutique
competitors (O’Brien, 2019).
Strength Relative to Competitors
In mid-2019, growth in the fitness industry was strong with the most growth occurring among
boutique brands, but experts warned of an industry slowdown in the event of a recession (Olick,
2019). This is likely due to the fact that spending on fitness classes is typically considered a
luxury that people can do without if need be. Spending on fitness equipment rather than
disposable class packages decreases overall cost per workout and increases equipment utility in
the long run. In response to recent COVID-19 developments and CDC recommendations, most
clubs have shut their doors to the public. This puts Peloton at a competitive advantage over
1
For further financial detail on Peloton Interactive, Inc., see tables 1-3.

6. PELOTON ANALYSIS 6
boutique and big gym competitors due to the sheer fact that their business does not rely upon
holding in-person classes and therefore is minimally affected by social distancing measures
(exempt from this would be sales related to Peloton’s sole NYC studio). During the economic
recession that the world is experiencing today, streaming companies like Peloton are seeing
increases in sales as customers of boutique brands and gyms shift their routines to accommodate
working out from home, while other firms are having to make drastic cuts to their operations and
payroll costs. This section explores both long-term and recent trends in the financial health of
Peloton and its most notable competitors.
Boutique brands. Boutique fitness brands often define a specific workout modality as a
specialty and focus on perfecting that specialty, often to the extent that it warrants high class
prices, luxurious amenities and cult-like followings. Spin juggernaut SoulCycle and multi-
faceted Barry’s Bootcamp will be the focus of this section. Both companies have a recent history
of enormous international expansion and are at present strong competitors to Peloton; however,
slowed growth and recessional issues put Peloton at a clear competitive lead.
SoulCycle. Founded in 2006, SoulCycle is the proprietor of the modern-day indoor
cycling trend boasting club-like environments, celebrity-like instructors and a notable connection
to the music industry. Last month, SoulCycle announced the presale of its new at-home bike
designed to directly compete with Peloton. SoulCycle is a private firm that applied for an IPO in
2015 but later retracted in 2018, citing “unfavorable market conditions” (Garun, 2020). Many
speculate this retraction was also due to increased competition with Peloton, whose flagship
product and streaming service were extremely similar to SoulCycle’s. Along with most
nonessential businesses, SoulCycle closed all 99 of its studios globally in response to the
coronavirus pandemic. Garun also cites that many employees have either been furloughed or
taken drastic pay cuts this month as a result of the crisis (2020).

7. PELOTON ANALYSIS 7
Barry’s Bootcamp. Barry’s Bootcamp recently announced the launch of its new cycling
concept, Barry’s Ride, to be deployed in the U.S. coastal markets. Cycling classes will be held in
“pop-up” style studios in New York City and Los Angeles in order to gauge community response
before extending the initiative to other markets. The brand plans to expand its signature
bootcamp workout even further with senior director of curriculum, Chris Hudson, noting that the
company plans to open an additional 25 domestic studios in 2020 and 100 more worldwide
within the next five years (Schlinger, 2019). This concept trails on the efforts made by Peloton
and SoulCycle and is sure to be a competitive force to be reckoned with among boutique-brand
loyalists. Plans are still unfolding as 2020 and recent coronavirus-related events continue to pan
out, which may or may not alter Barry’s Bootcamp’s strategy.
Big gyms. Contrary to boutique brands, big gyms diversify their offerings by allowing
members access to many different modalities at a lower cost versus specializing in any one thing.
Big gyms have been around longer than boutique brands and many have gone public, which is
why Planet Fitness will be the competitive metric by which Peloton is assessed in this report.2
Planet Fitness. Planet Fitness has reported lower overall sales than competitor Peloton,
as well as higher total liabilities than total assets. In terms of solvency, Planet Fitness appears to
be at a disadvantage to Peloton. However, Planet Fitness has maintained a net income while
Peloton has reported net losses, even though Peloton brings in more gross revenue per fiscal
year. This puts Planet Fitness at a profitability advantage, which may indicate a stronger ability
to ensure long-term growth and stability than its competitor. Like Peloton’s, Planet Fitness’s
shares fell below IPO price upon debut on the New York Stock Exchange in 2015. Additionally,
“though Planet Fitness has posted profit and store growth… analysts deem that growth to be
unsustainable” (Huston, 2015). Supposed reasons for this conclusion could be that concepts such
2
For further comparison between Peloton Interactive, Inc. and Planet Fitness, Inc., see tables 2-3.

8. PELOTON ANALYSIS 8
as Planet Fitness do not appeal to the modern trends in fitness and present a less attractive,
outdated service, albeit at a lower price.
External Analysis
Peloton arguably competes in two industries: fitness and digital business/streaming
services. What sets Peloton apart is the intelligent combination of the two in order to capture a
unique corner of the industry. Even though Peloton may have seized a large portion of the home
workout market early on by making popular fitness accessible on-demand, they will need to
continue to innovate both their products and services in order to maintain a competitive
advantage. Below are insights into the five competitive forces Peloton faces as well as an
analysis summarizing the firm’s opportunities and threats. Effects of the general economic
environment on Peloton will be discussed throughout this section.
Porter’s Five Forces Model
This analysis of Peloton’s competitive performance in the context of Porter’s Five Forces Model
will touch on forces in both the fitness and streaming industries and how they affect Peloton’s
business strategy.
Bargaining power of buyers. According to Nicholas D. Evans of CIO, the bargaining
power of buyers in digital business is “perhaps the strongest of the five forces impacting industry
competition… since the biggest driver of digital business comes from the needs and expectations
of consumers themselves” (2015). In the age of the internet, consumers of digital goods are used
to having services tailored to their unique needs and wants. User experience is becoming an
increasingly valuable asset to companies’ value propositions and with an abundance of options,
buyers will quickly move to the lowest-cost provider of their expected experience. Where
Peloton is unique is in selling their products- stationary bikes and treadmills- in conjunction with
subscriptions to their streaming services. In order for consumers to capture the best value of their

9. PELOTON ANALYSIS 9
memberships, ownership of Peloton-branded products is optimal since the streamed classes are
specific to the mechanics of those products. If a competitor were to come alongside Peloton with
a cheaper product alternative and a streaming service of the same quality (such as SoulCycle,
who is currently pre-selling branded at-home bikes), then Peloton may be forced to lower its
prices or enhance the quality of its online class catalog in order to continue to compete with new
entrants.
Bargaining power of suppliers. In its 2019 IPO paperwork, Peloton disclosed that they
had spent $47.4 million acquiring one of its two main bike manufacturing partners, Taiwanese
company Tonic Fitness Technology, Inc. According to a 2019 Business Insider article by Mary
Hanbury, this was a strategically sound acquisition because buying Tonic Fitness enabled Peloton
to “reduce some of the risks associated with being at the mercy of its third-party manufacturing
companies” and increase control by decreasing supply chain uncertainties. This lowers the
bargaining power of suppliers and puts this force in Peloton’s favor.
Rivalry among competitors. In both the fitness and streaming industries, the rivalry
among competitors is extremely high. Evolution of historically in-person fitness concepts into
digital hybrids in recent years is only adding to the cutthroat nature of competition. In addition to
other streaming services, customers also have the option of working out at a myriad of local and
chain gyms boasting countless options at nearly every price point imaginable.
Streaming and digital fitness. Once a unique startup a mere four years ago, Peloton is
now inundated with competition from both established and up-and-coming firms eager to seize a
portion of Peloton’s market share. As discussed in the financial section above, both SoulCycle
and Barry’s Bootcamp have recently introduced Peloton-inspired concepts. SoulCycle, with its
exceptional brand identity and support of parent company Equinox, may be a serious contender
for Peloton to deal with into the future. According to its website, SoulCycle’s signature indoor

10. PELOTON ANALYSIS 10
cycling workouts will be available on an app that also features workouts from partners Precision
Run, Pure Yoga and Equinox on an integrated streaming platform much like Peloton’s (2020).
Barry’s Bootcamp has yet to launch an at-home bike, but in-person classes in the NYC market
are sure to compete with Peloton’s Chelsea, Manhattan studio and further divide customer
loyalties as more and more popular brands expand their offerings.
Threat of new entrants. The most competitive of “entrants” into the streaming/digital
fitness industry are established players who have recently introduced digital concepts (again, e.g.
SoulCycle). True start-up at-home cycling businesses face a multitude of barriers to entry, such
as brand loyalty and recognition, cost of capital, marketing, sales and R&D. The largest players
in the at-home bike game are those who have already invested heavily in indoor cycling and
proven their brands and concepts. New entrants are likely to continue to increase in number as
the economy continues to shift this quarter to accommodate individuals forgoing studio classes
and staying at home.
Threat of substitutes. Other streaming concepts like Mirror, a $1500 LCD mirror that
streams workout classes into one’s home with the unique advantage of allowing users the ability
to watch themselves workout alongside their instructors, are also gaining traction in the industry
(Hanbury, 2020). In times of frugality, customers can access millions of workouts for free on
YouTube and other social media sites, as demonstrated by the enormous increase in the number
of free live streams from furloughed fitness instructors during the COVID-19 pandemic. Once
either the Peloton-branded bike or treadmill is purchased, consumers are unlikely to switch to a
different company’s streaming service, but the threat lies in the consumers who have disposable
income who may still be considering their options. In a time of economic downturn, the number,
cost and quality of viable alternatives may surpass the benefits one may gain from purchasing
Peloton’s products and services.

11. PELOTON ANALYSIS 11
External SWOT Analysis
Discussed below are the current opportunities and threats Peloton faces in light of its competitive
landscape and recent coronavirus developments.
Opportunities. While most nonessential businesses are struggling right now, Peloton is
poised to benefit from its at-home business model as shelter-in-place requirements expand and
tighten. Competitor SoulCycle is pressed for cash following the announcement of its studio
closures, which may or may not impact its ability to deliver on the presales of its at-home bike.
Peloton, however, is capitalizing on current economic conditions forcing consumers all across
the globe to stay home, and their “trailing 12 months” financials reflect increased growth in
quarters 1 and 2 of this year as compared to FY19.3
Threats. CNBC asserts that Peloton has few “legitimate” threats in the at-home fitness
space and that the concept is both attractive and enduring; however, Wedbush analyst James
Hardiman also predicts, much like earlier sections of this analysis, that SoulCycle will be
Peloton’s greatest threat in the new decade (Stankiewicz, 2020). However, CNBC’s article was
written at the beginning of this year and many recent developments are continuing to alter the
strategic course for nonessential businesses. Peloton may face threats to its cash flow in the short
term as market conditions and consumer spending decline, which will affect the firm’s ability to
become profitable amidst high operations costs and costs of revenue4
and to pay off long-term
debts, which amount to more than half of the firm’s liabilities.5
Internal Analysis
According to Inc., Peloton actually operates as five businesses: a bike manufacturer,
luxury gym, production studio, retailer and video producer (2016). Its value chain is integrated
3
See table 1
4
See table 1
5
See table 2

12. PELOTON ANALYSIS 12
and complex. Discussed below are the specific elements of this value chain, whether they serve
as a competitive parity or advantage and whether such advantages are sustainable. This section
also includes a summarized assessment of Peloton’s internal strengths and weaknesses.
Value Chain Analysis
Incorporated into Peloton’s value chain are its primary and supporting activities. Together these
indicate which portions of the firm’s operations create value and if so, to what scale. Analyzing
these activities helps Peloton to understand where it incurs the most costs and where excess
spending can be cut, identify effective and efficient operations, assess processes for
improvement, optimize competitive edge and understand how to best achieve strategic
objectives.
Primary activities. The activities below are associated with the physical creation of
Peloton’s products and their subsequent distribution, sale and service after sale.
Inbound logistics. Because Peloton maintains control over its supply chain as a result of
acquiring its manufacturing partner, Tonic Fitness Technology, inbound logistics are likely to be
extremely streamlined. The company utilizes operational cost reporting and KPI standards in
their logistics communications. This is a sustainable competitive advantage for Peloton.
Operations. Peloton values quality and continuous improvement in its operations. A job
posting on LinkedIn this month detailed requirements for a Supply Chain Process Manager and
emphasized “striving for global standardization”, “broadening [the firm’s] supply chain
footprint” and “ensuring optimal fit between people, processes and technology” (Peloton
Interactive, 2020). Peloton continues to expand globally, and operations seems to be a
sustainable competitive advantage.
Outbound logistics. Peloton has retail showrooms throughout the U.S., Canada and U.K.
These showrooms are designed to give customers an in-person look at Peloton’s products and try

13. PELOTON ANALYSIS 13
them out before committing to a purchase. Peloton uses warehouses to store inventory, NetSuite
to handle orders and ERP and its own proprietary streaming platform to distribute content. The
app is polished and professional, with minimal glitches and capable of supporting large numbers
of users streaming from the server at a single time. Outbound logistics is diversified and multi-
faceted and serves as a sustainable competitive advantage.
Marketing & sales. Recently Peloton came under fire for a controversial holiday
advertisement it aired in late 2019. Critics accused the company of being insensitive by including
sexist stereotypes in a television commercial where a man gifts his wife with a Peloton bike.
According to Scott Mautz of Inc., the inclusion of a slender, attractive woman in the role of an
approval-seeking housewife was built on an intrinsically negative premise and archaic gender
roles (2019). In response to the ad the following week, Peloton’s stock price saw a 9% dip. For a
premium brand like Peloton to have to clean up the mess of an advertising flop means that this is
a current competitive parity for Peloton.
Service. Service represents the preeminent sustainable competitive advantage out of all of
Peloton’s primary activities. Joshua Fruhlinger of Thinknum observed last year that around the
same time that Peloton filed their IPO, job openings in the company soared from 300 to 393
“seemingly overnight” (2019). He added that the newest job category listed on the company’s
site, “Field Specialist,” was the most in-demand, representing around 150 of the listings. Field
Specialists at Peloton are responsible for ensuring the smooth delivery and installment of Peloton
products, educating customers on the function and features of those products and assisting with
maintenance and repair. As Fruhlinger observes, this role may be the only human “touch point”
that the company has with its customers (those that purchase online versus from a showroom),
and Peloton is obviously seeking to establish a reputation for outstanding, premium service.

14. PELOTON ANALYSIS 14
Support activities. The activities below are essential in supporting the primary activities
above.
Firm infrastructure. Peloton is a modern, culturally relevant and socially sensitive
company. Its recent incorporation in 2012 and appeal to young, wealthy professionals indicates
that the company was built on modern, millennial principles akin to those of lululemon athletica
and SoulCycle and publicly values corporate social responsibility, fair pay and equal opportunity.
Peloton also boasts socially conscious initiatives designed to give back, including the Member
Relief Fund that covers subscription membership costs for Peloton customers affected by
COVID-19, and the US Comeback program, designed to support the efforts of healthcare
professionals by providing many with bikes and subscriptions at no cost. As a public company,
Peloton issues common stock and details its financial strategy in letters to its shareholders.
According to the letter for Q2 2019, net loss due to increased operations costs (55% of total
revenue) was justified by spending related to strategic acquisitions and marketing for its new
Tread product. The firm stated, “we believe these strategic investments in our sales and
marketing channels will set us up for future continued growth” (Peloton Interactive, 2019).
Peloton has not issued any dividend payouts since its IPO filing in 2019. Firm infrastructure in
the financial sense is currently a competitive parity, with continued incurred net losses. In terms
of corporate social responsibility, Peloton maintains a sustainable competitive advantage.
Human resource management. According to a recent Glassdoor review, Peloton has
taken great care of its employees during the COVID-19 pandemic by ensuring the continuation
of benefits and pay for full-time workers. In a training pamphlet, Peloton indicates that it
“understands the importance of teamwork,” places “employees at the heart” of the brand and
“leaves no stone unturned when it comes to ensuring the wellness of its employees” (Peloton
Interactive, Inc., n.d.). Included in employee benefits are tuition reimbursement and student loan

15. PELOTON ANALYSIS 15
assistance programs. The company scores a 3.5/5 on Glassdoor, indicating that human resource
management is a sustainable competitive advantage.
Technology development. According to founder John Foley, “Peloton is so much more
than a bike… it is an opportunity to create one of the most important and influential interactive
media companies in the world; a media company that changes lives, inspires greatness and unites
people” (Schleifer, 2019). Integral to the Peloton business model is a necessity for efficient,
aesthetic, seamless and instantaneous technology. Peloton’s business model requires that it
establish itself as a top-tier media company in order to support its competitive positioning as the
premier at-home exercise brand of choice. Microphoned instructors, coordinated music, real-time
A&V streaming and the need for on-demand access to a digital catalog of classes command
Peloton to continue to push the bleeding edge of technological development. They currently
succeed in doing so by continually optimizing, improving and adding to their SAAS (software as
a service) through entire corporate divisions and specialized positions dedicated exclusively to
production, information systems, graphic design and programming. This is a competitive
advantage as long as Peloton can monitor its competitive landscape and update its streaming
platform, website and social media accounts continually with the latest and greatest features.
Procurement. Peloton does not disclose details of its procurement and raw materials
sourcing. However, there are positions within the company dedicated to procurement. Whether
this is a competitive advantage or parity cannot be determined under the scope of this report.
Internal SWOT Analysis
Discussed below are the strengths and weaknesses of Peloton’s internal business environment.
Strengths. Peloton’s best assets are its customer service, operations, logistics, mission
and values, human resource management, technology development, brand identity and corporate
social responsibility. Juggling many business identities including exercise equipment

16. PELOTON ANALYSIS 16
manufacturer/distributor, multimedia production company and entertainment/streaming service
provider means that Peloton must seamlessly integrate all of its functions into a well-oiled,
unified corporate machine. Its success in ensuring the smooth integration of all of these functions
is precisely its greatest strength.
Weaknesses. Peloton must continually evaluate its financial strategy to ensure longevity
and ability to pay off its debts. Currently, a pattern of incurring net losses year over year is a
weakness of the firm’s. Marketing and advertising strategies must also see an overhaul and
undergo a bit of damage-control following backlash to the 2019 holiday commercial debacle.
Strategic Problems
Three strategic problems that Peloton is facing include how to coordinate and iterate its
response to the current COVID-19 pandemic, how to maintain industry relevance as threats from
competitors intensify and how to ensure its stock price continues to rise and remain above IPO
price.
COVID-19 Pandemic
Continuing developments regarding the novel coronavirus and its impact on global supply chains
must be continually monitored. Business functions must shift to accommodate nonessential
employees working from home. Decisions must be made about furloughs, cash flows, and
modified strategies for how to distribute products to customers who cannot visit showrooms in
person.
Competitive Threats
As detailed above, SoulCycle remains Peloton’s greatest threat in the at-home indoor cycling
industry. Maintaining a competitive edge above SoulCycle means that Peloton will need to up its
marketing, talent and technology game in order to provide a premium service to customers and
win over SoulCycle loyalists and agnostics evaluating which at-home bike to purchase.

17. PELOTON ANALYSIS 17
Stock Price
Peloton’s stock price is currently $31.99, which only this week surpassed its IPO price of $29.
Many consider Peloton’s IPO to have flopped in late 2019, and the company will have to
strategize how to continue to increase its stock price in order to continue to attract shareholders
and raise sufficient capital to fuel its high operations expenses.
Recommendations
The recommendations below address the three strategic problems above and indicate the
strategic changes Peloton should implement in order to optimally benefit its stakeholders.
Response to the COVID-19 Pandemic
Just two days ago, a CFA for Seeking Alpha predicted that belt-tightening in a time of economic
recession may prevent widespread adoption of Peloton’s products and services as an at-home
fitness solution (Kicker, 2020). While Peloton’s business model seems primed for an era of stay-
at-home orders, its premium price may exclude certain demographics of consumers from being
able to spend extravagantly throughout Q2 and Q3, even if those consumers would typically be
inclined to purchase a premium product. The CFA also notes that Peloton’s price/sales ratio is
6.4, which more accurately mirrors that of a technology company, not a luxury goods retailer,
and “implies that the company will continue to grow at a rapid rate” (Kicker, 2020). The best
things that Peloton can do in light of COVID-19 are to take care of its employees, expand social
and promotional initiatives in order to get product in the hands of more people and temporarily
increase spending on marketing in order to convey the best possible positive message to the
public. By continuing to pay employees’ salaries and benefits, fewer investors will panic about
the company cutting costs or downsizing in retaliation to the volatile market and will be less
inclined to sell their shares. The best thing that Peloton can do now is to treat its employees well
and retain their loyalty so that coming out of this pandemic, the company will continue to boast

18. PELOTON ANALYSIS 18
great talent and employee satisfaction levels. Provisions should be made for instructors and full-
time employees to continue to receive pay and work to the best of their ability (even if it means
that executives publicly take a pay cut or temporarily forgo their salaries), and furloughs should
be made for part-time employees and nonessential contractors to allow them to receive
unemployment benefits with a clear path in the future for them to occupy their positions once
again. Ultimately, the best thing Peloton can do if they cannot continue to pay employees in full
is to be honest and upfront, treat them with dignity and respect and reassure them of future
opportunities. Maintaining a respectable reputation as an employer is crucial for success in a
post-COVID-19 economy where firms will be judged on their response to this crisis.
Additionally, Peloton should increase spending on short-term marketing in order to get the
message out about their Member Relief Fund and The Comeback initiative. The company should
consider expanding The Comeback to offer more free bikes and memberships to healthcare
professionals on the frontlines of the pandemic. The company will accomplish this best with a
storytelling approach, where real members and users can share their stories in order to capitalize
on the sentiments of the public and build a trustworthy, memorable brand image asserting that
Peloton cares. One thing the company is doing very well is extending free trials of their
subscription service to 90 days, allowing users to experience the app, establish habits and grow
in their loyalty to the brand.
Optimize Competitive Opportunities
Although an unfortunate development, the coronavirus pandemic is perhaps the greatest
opportunity that Peloton has to gain a competitive edge over SoulCycle. SoulCycle’s main
revenue earner- its 99 studios- is currently subject to mandatory government closure, halting the
flow of cash into the firm with alarming repercussions. SoulCycle has furloughed or cut the pay
of most of its studio employees and instructors in order to cut costs (Garun, 2020). Without cash

19. PELOTON ANALYSIS 19
flow into the firm, it may not have the necessary capital to fulfill all orders of its new at-home
bike. Global manufacturers are experiencing clogged supply chains and a delay of order
fulfillment is a likely result. If Peloton can strategically use the time SoulCycle must take to do
damage-control and focus on creating irreplicable benefits of its products and/or platform in the
meantime, Peloton will remain ahead of SoulCycle’s curve. One way to do this is to invest in
talent scouting and recruiting. During social distancing, Peloton can focus its efforts on scouting
the best-of-the-best instructors and providing them offers they can’t afford to resist. Furloughed
instructors from various studios and independent personal trainers may be in dire need of
opportunity, and if Peloton can seize that opportunity and provide them a platform, the company
will hold onto its competitive edge. Post-COVID-19, Peloton should consider offering a third
product, something like the Mirror concept or an additional modality like rowing. The more that
Peloton can become a one-stop-shop for fitness enthusiasts and provide everything its consumers
want in a single place, the more the company can ensure the Peloton name becomes synonymous
with at-home fitness.
Increase Stock Price
At its most basic premise, increasing stock price involves increasing public faith in a company’s
future well-being. When investors believe the value of a business is likely to increase and they
can sell at a profit at a later date, more will purchase a company’s stock, increasing demand of
shares and driving the stock price up. Wedbush analyst Hardiman believes that “Peloton’s short-
term growth will be powered by exercise bike sales,” but argues “its subscriptions will be its
main value driver over the long-term” (Stankiewicz, 2020). Peloton desperately needs to increase
its revenues. COVID-19 may be the perfect excuse to temporarily discount its products, but the
company needs to be careful how they market such a price drop. If investors suspect the
company is succumbing to economic turbulence or competitive threats, they will be more likely

20. PELOTON ANALYSIS 20
to sell their shares. However, if Peloton can devise a weeklong (or so) initiative under a socially
conscious campaign with the end result being the purchase of equipment for a lower price at a
higher volume, the company will be more likely to retain those individuals’ subscription
renewals going forward. The Comeback initiative can be expanded to include a discount code for
all healthcare-related professionals in order to drive a steep increase in sales in a short period of
time and lengthen the lifetime value of customers by incentivizing them to buy now. Those
individuals will then continue to pay for memberships in the future. The company can also
consider other solutions to “surprise and delight” community members and publicize these
efforts on social media.

21. PELOTON ANALYSIS 21
References
Evans, N. D. (2015, August 26). How digital business disrupts the five forces of industry
competition. CIO. Retrieved from https://www.cio.com/article/2976572/digital-
disruption-from-the-perspective-of-porters-five-forces-framework.html
Frieswick, K. (2016, May). This startup will keep you from ever going to the gym again. Inc.
Retrieved from https://www.inc.com/magazine/201605/kris-frieswick/peloton-studio-
cycling-home-fitness.html
Fruhlinger, J. (2019). Peloton hiring to bring delivery and installation in-house as IPO
approaches. Thinknum. Retrieved from https://media.thinknum.com/articles/peloton-in-
housing-delivery-and-lastmile/
Garun, N. (2020, April 1). SoulCycle cuts staff pay by 25 percent while putting studio crew on
indefinite furlough. The Verge. Retrieved from
https://www.theverge.com/2020/4/1/21203012/soulcycle-staff-pay-cut-furlough-
coronavirus-pandemic
Hanbury, M. (2020, January 7). We tested the $1500 mirror that streams exercise classes into
your home and saw how it could upend the fitness world. Business Insider. Retrieved
from https://www.businessinsider.com/1500-dollar-mirror-streams-workout-classes-
review-2018-11
Hanbury, M. (2019, November 5). Peloton spent $47.4 million on a company that makes its
bikes, tackling one of its biggest risks. Business Insider. Retrieved from
https://www.businessinsider.com/peloton-acquires-bike-manufacturer-addresses-one-of-
its-biggest-risks-2019-11

22. PELOTON ANALYSIS 22
Huston, C. (2015, August 6). Planet Fitness shares tumble below IPO price in trading debut.
MarketWatch. Retrieved from https://www.marketwatch.com/story/planet-fitness-shares-
tumble-below-ipo-price-in-trading-debut-2015-08-06
Kicker, V. (2020, April 10). Peloton Interactive: Going nowhere. Seeking Alpha. Retrieved from
https://seekingalpha.com/article/4337014-peloton-interactive-going-nowhere
Mautz, S. (2019, December 6). A Peloton ad sparked huge controversy over its sexism. It’s also
just a terrible commercial. Inc. Retrieved from https://www.inc.com/scott-mautz/a-
peloton-ad-sparked-huge-controversy-over-its-sexism-its-also-just-a-terrible-
commercial.html
O’Brien, S. A. (2019, October 7). Peloton falls below IPO price in Wall Street debut. CNN
Business. Retrieved from https://www.cnn.com/2019/09/26/tech/peloton-ipo/index.html
Olick, D. (2019, August 19). Fitness spending is flying high, but a recession could hit boutique
brands first. CNBC. Retrieved from https://www.cnbc.com/2019/08/19/boutique-fitness-
brands-could-be-hit-first-in-a-recession.html
Owens, J.C. (2019, September 28). Peloton IPO: 5 things to know about the interactive exercise-
machine company. MarketWatch. Retrieved from
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Peloton Interactive, Inc. (2019). Q2 letter to shareholders. Retrieved from
https://investor.onepeloton.com/static-files/aa03b22d-4579-4ff3-a8c1-e8c3dcac1784
Peloton Interactive. (2020, April 8). Job posting: Supply chain process manager. LinkedIn.
Retrieved from https://www.linkedin.com/jobs/view/supply-chain-process-manager-at-
peloton-interactive-1727881171/

23. PELOTON ANALYSIS 23
Peloton Interactive, Inc. (PTON). (2020, March 30). Financials, Income Statement and Balance
Sheet. Yahoo! Finance. Retrieved from https://finance.yahoo.com/quote/PTON?p=PTON
Peloton Interactive, Inc. (n.d.). Unnamed corporate training pamphlet. The Muse. Retrieved
from https://www.themuse.com/profiles/peloton
Planet Fitness, Inc. (PLNT). (2020, April 11). Financials, Income Statement and Balance Sheet.
Yahoo! Finance. Retrieved from https://finance.yahoo.com/quote/PLNT/financials?p=
PLNT
Schleifer, T. (2019, August 27). Peloton, a bike company, claims it “sells happiness” and is “so
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8/27/20835839/peloton-ipo-filing-messaging-happiness
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cycling concept: Barry’s ride. Bicycling, Hearst Digital Media. Retrieved from
https://www.bicycling.com/news/a30983709/barrys-launches-barrys-ride/
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s1.htm
Stankiewicz, K. (2020, January 15). Peloton has few ‘legitimate’threats in the at-home fitness
space, says bullish Wedbush analyst. CNBC. Retrieved from
https://www.cnbc.com/2020/01/15/peloton-has-few-legitimate-threats-in-at-home-fitness-
space-wedbush.html

24. PELOTON ANALYSIS 24
Tables
Table 1
Change in financials: Peloton Interactive, Inc.
PTON Trailing
12
months
6/30/19 6/30/18 6/30/17 Trends
Income Statement
Sales 1,234,300 915,000 435,100 218,600 Increased by ~2x from 2017-2019
Ctnd. growth Q3 2019-Q1 2020
Cost of Revenue (711,400) (531,400) (245,400) (144,700) 1.7x increase 17-18, 2.2x increase 18-19
Ctnd. increase
Gross Profit 522,900 383,600 189,600 73,900 2.6x increase 17-18, 2x increase 18-19
Ctnd. increase
Operating Expenses (726,100) (585,800) (237,200) (144,600) 1.6x increase 17-18, 2.4x increase 18-19
Ctnd. increase
Operating Income or
Loss
(203,200) (202,200) (47,600) (70,700) 67% improvement 17-18, 425% decline
18-19, ctnd. decline at lesser rate
….
Net Income (191,200) (195,600) (47,900) (71,100) Net loss decreased by 67% 17-18,
increased 4x 18-19, and is decreasing
recently
Balance Sheet
Cash 378,100 150,600 2.5x increase
Inventory 136,600 25,300 5.4x increase
Current Assets 581,700 203,800 2.9x increase
Non-Current Assets 282,800 67,500 4.2x increase
Total Assets 864,500 271,200 3.2x increase
Current Liabilities 290,800 170,200 1.7x increase
Non-Current
Liabilities
171,200 416,600 59% decrease
Total Liabilities 462,000 586,800 21% decrease
Total Equity 402,500 (315,600) + $718,100
Total Liabilities +
Equity
864,500 271,200 3.2x increase
Note: (Peloton Interactive, Inc., 2020). All numbers in thousands.

25. PELOTON ANALYSIS 25
Table 2
Financial health: Peloton Interactive, Inc. and Planet Fitness, Inc.
Items PTON
(as of 6/30/19)
% PLNT
(avg. of 12/31/18 and 12/31/19)
%
Income Statement
Sales 915,000 145% 630,851 100%
Operating Income (202,200) 197% 208,564 100%
Net Income (195,600) (190%) 102,858 100%
Balance Sheet
Total Assets 864,500 100% 1,535,303 100%
Total Liabilities 462,000 22% 2,080,575 100%
Total Stockholders’ Equity 402,500 174% (540,515) 100%
Note: (Peloton Interactive, Inc., 2020). (Planet Fitness, Inc., 2020). All numbers in thousands.
Table 3
Financial ratios: Peloton Interactive, Inc. and Planet Fitness, Inc.
Ratios PTON
(as of 6/30/19)
PLNT
(avg. of 12/31/18 and 12/31/19)
Current Ratio 2.0 3.35
Quick Ratio 1.53 3.33
Debt-to-equity Ratio 1.15 -3.85
Debt-to-total Assets Ratio 0.53 1.36
Inventory Turnover 6.64 101.85
Total Asset Turnover 1.61 0.41
Gross Profit Margin 41.92% 51.57%
Net Profit Margin (21.38%) 16.30%
Return on Assets (34.45%) 6.70%
Return on Equity (48.60%) (19.03%)
Note: (Peloton Interactive, Inc., 2020). (Planet Fitness, Inc., 2020).