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- Peloton set a price range of $26 to $29 a share for its upcoming IPO.
- The maker of internet connected fitness equipment said it intends to sell 40 million Class A shares in the offering.
- The planned offering would value Peloton at up to $8 billion, double the private market valuation that it fetched one year ago.
- Peloton said it will raise as much as $1.3 billion in the IPO.
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Peloton, the buzzy maker of expensive internet-connected stationary bikes and treadmills, is sprinting towards an IPO that would award it a rich, $8 billion valuation – double what the money-losing company was valued at just one year ago.
The offering, expected in the coming weeks, would allow Peloton to raise as much as $1.3 billion, according to its latest S-1 document, filed with the SEC on Tuesday.
Peloton’s ambitious IPO plans come at a time when another high-profile company – office sharing company WeWork – has faced brutal scrutiny after launching its IPO process and has reportedly had to slash the price it expects its shares to fetch.
The two New York-based companies have a lot of similarities, including controversial capital structures that concentrate the voting control among insiders as well as spiraling losses. Peloton has posted a net loss every year since its founding in 2012, though its $539 million in cumulative red ink is significantly below the nearly $2 billion that WeWork lost in just the last year alone.
Peloton plans to sell 40 million shares of its Class A stock to public investors, priced somewhere between $26 a share and $29 a share. The company said the underwriters of the IPO would have the right to purchase an additional 6 million Class A shares.
The IPO would value Peloton somewhere between $7 billion and $8 billion, depending on where the shares price. That’s a significant step up from Peloton’s last valuation in the private markets in 2018, when venture investors pegged its worth at $4 billion.
According to Bloomberg, the company and its bankers could kick off the roadshow on Wednesday to pitch the offering to investors.
A big raise for CEO John Foley
Peloton also disclosed that it had entered into a new employment agreement with founder and CEO John Foley on Monday, doubling his annual salary from $500,000 to $1 million. Foley will also be eligible for annual bonus equal to up to 100% of his $1 million salary.
After the IPO, Foley will have 6% voting power at the company, based on his 15 million shares of Class B stock, which have 20 votes per share. Existing Peloton investors Tiger Global Management will control 19.6% of the voting power after the IPO, while True Ventures will have 11.9% voting power.
Public market investors who buy Class A shares in the IPO will be entitled to one vote per share.
Founded in New York in 2012, Peloton sells $2,000 internet-connected stationary bikes, as well as pricey treadmills. Customers also pay anywhere between $19 and $40 month for access to specially produced live exercise classes. The company describes itself as both a media company and a global technology platform.
Peloton boasts that its “churn rate,” the portion of subscribers who cancel service, is extremely low. But according to customer-retention experts that Business Insider has spoken to, Peloton’s reported churn metrics are significantly understated.
Peloton, which lost roughly $246 million in fiscal 2019 despite fast growing revenue, plans to trade on the Nasdaq exchange under the “PTON” ticker.