Peloton Interactive shook up the multibillion fitness equipment market six years ago market when it introduced a $1,995 video-enabled stationary bike. This year it’s turning heads again, displaying its $3,995 treadmill at the Consumer Electronics Show.
Unlike less expensive, conventional treadmills, the Peloton Tread provides allows exercisers to access thousands of boot-camp classes that are popular in gyms through a 32-inch HD touchscreen. Peloton plans to sell the treadmill for $149 monthly installments, comparable to memberships in high-end gyms. Consumers will also have to pay $39 a month for access to content.
“There’s been an explosion of people wanting these circuit workouts,” said Peloton CEO John Foley in an interview. “It is absolutely not all the fitness equipment of yesterday.”
Although the workout is centered around the treadmill, trainers will also lead users, via video, in core strengthening and weight training on the floor. Peloton, which also plans to introduce a new line of weights, uses a system of 59 shock-absorbing slats to provide treadmill users with extra support while running.
Peloton’s strategy of focusing on creating user experiences as opposed to marketing a piece of hardware appears to be paying off. The company had nearly $400 million in sales in 2017, more than double 2016’s $170 million is “effectively profitable” on an adjusted basis.
Closely held Peloton has raised $325 million from outside investors at a “unicorn-level” (more than $1 billion) valuation of $1.25 billion as of 2017.
“We don’t have any immediate plans to go public,” Foley said in a phone interview. “We don’t need the money. We are well capitalized.”
The Peloton Tread, which costs roughly triple the going rate for comparable treadmills, faces many challenges in standing out in a crowded marketplace that includes competition from rivals including SoulCycle and Flywheel.
Though Peloton’s 158 percent revenue growth over the past two years has lagged both Fitbit (FITB) (212 percent) and GoPro (GPRO) (186 percent), analysts at Raymond James described Peloton’s performance as “impressive given Peloton’s materially higher price point.”
Some commentators, however, have likened the loyalty of Peloton customers to a “cult” because some congregate on Facebook (FB) fan pages and travel to the company’s New York “mothership” for live classes. According to The New York Times, the bond between the company’s customers and instructors is so intense that many instructors are mobbed on the street, thanks to social media.
Peloton is currently accepting pre-orders for the Tread, but deliveries aren’t due to begin until the fall.
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