I spent some time last week looking at $Peloton Interactive (PTON)$, and also went to the store to experience the hardware and app. There are currently some opinions.

spent some time last week looking at $Peloton Interactive (PTON)$, and also went to the store to experience the hardware and app. There are currently some opinions.

The bike in the black mirror looks quite similar to Peloton.

For those who don’t know Peloton, let me introduce you first. The mission of this company is to bring the gym home and sell you a very good and expensive one. Hardware ( spinning bike , two thousand US dollars; treadmill, more than four thousand US dollars), and then you pay a monthly subscription fee of US$39, and you can take various history courses and live broadcast courses on the spinning bike or treadmill. . You can also just subscribe to the course for $20 a month.

At present, the main differences in opinions about the company in the market are whether the target group of this market has been saturated; whether this business model can ultimately be profitable (the current gross profit margin of hardware is 43%). What is strange is that the gross profit margin of its software subscription is only More than 40%

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); If the U.S. economy slows down, users who are suddenly in financial distress may no longer pay, causing a credit crisis and so on.

Let me talk about the products and store conditions that I observed on the spot.

First of all, the business of selling treadmills is probably dead. The judgment is based on the following:

video is not acceptable. Its treadmill is equipped with a huge screen, 32 inches. It is much larger than the screen of its bicycle. But I don’t know what the company thinks. The quality of the video recorded for the treadmill does not match that of a larger screen. It looks obviously blocky. Maybe it’s software and network considerations? Anyway, it looks unpleasant.

The experience of looking at the screen at such a close distance on a treadmill is not good. Far inferior to the experience of watching a screen on a bicycle. Although the screen is already large, it shakes a lot when running, making it uncomfortable to watch.

treadmills generally have automatic courses that automatically control the speed and slope rate. However, if you use the peloton treadmill to take classes, you need to give up these and manually adjust it yourself. This is an inconvenient experience. Generally speaking, you can adjust a spinning bike by yourself. When taking online courses, you also adjust according to the instructions of the instructor. It is not a different experience. The number of people who have booked online courses on

app, and the number of people on the treadmill at the same time is less than one-tenth of the number of people on the bicycle. The prospectus of

vaguely mentions about US$100 million in inventory, which according to common sense should be the backlog of treadmills.

The treadmill itself is indeed very sturdy and of good quality. The design is relatively simple, with a flywheel on the left controlling the slope and a flywheel on the right controlling the speed. But if you remove the screen, I think the normal price should be around a thousand dollars which is more reasonable.

The treadmill business is the first step in Peloton's diversification. If it doesn't go well, it will be a big blow. Because peloton claims to also develop other fitness equipment.

As an aside, treadmills and bicycles are said to be made in Taiwan, so they will not be affected by tariffs.

After talking about the treadmill, let’s talk about the store. This store in the Bay Area is rented in the Stamford Mall, which is very high-end. The rent must be very expensive, but the store is not big, so you still have to spend money with some restraint. There are four bicycles and a treadmill inside. I went there at noon, and there was one other customer trying it out for an hour, two clerks, and another clerk came after lunch. The inquiry said that a business was done that morning.

Let’s talk about the valuation. If the United States is going to decline, then this high-end fitness market will definitely fail, and there will be nothing to say. If the United States can stabilize and household income can rise, the valuation is not particularly easy to say. The growth rate in the previous year was three digits. Although there is no particularly reliable benchmark in the market, I can barely compare it with Planet Fitness (PLNT). Planet Fitness is an affordable gym franchise. It costs 10 US dollars a month. You read that right, 10 US dollars. There is no account opening fee, and the advance payment is really 10 US dollars. The PS of Planet Fitness is about 9, while the current PS of Peloton is about 7 to 8.

Of course, the biggest difference here is that Planet Fitness is profitable, while Peloton is still losing money. Planet Fitness is extremely cheap, and no matter how you calculate it, Peloton is definitely extremely expensive.If Planet Fitness is $Pinduoduo (PDD)$, peloton is Secoo.

finally talks about some advantages. In fact, the advantages of being able to build a company worth 6 billion US dollars are really the main and outstanding ones. The founder initially just wanted to find a bicycle on the market and mainly engaged in live broadcast course subscriptions. However, after discovering that the bicycles on the market did not meet the requirements, despite the objections of investors, he still went ahead and developed a bicycle with all his heart. It is amazing and a real solution. Address user pain points. It also allowed Peloton to quickly surpass flywheels and soulcycle, the original leaders in the cycling fitness field, and successfully go on the market.

Let’s end with a fun picture. Soulcycle, which costs thirty dollars a class, is located next to the peloton at Stanford Mall.

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For reference by fitness experts