Thread by @JoePompliano

Peloton currently has over 3 million global members.

Their long-term goal?

100 million.

While most laugh, I actually think it's possible.

Time for a thread 👇👇👇

1) Since being founded by John Foley in 2012, Peloton has dominated the multi-year transition to at-home fitness.

The fitness equipment & media company has over 3 million members currently, but how do they get to 100 million?

Let's run through it…

2) First off, existing Peloton subscribers aren't going anywhere.

Here's a wild stat:

The average Peloton user is working out almost 21x per month, which is ~2x more often than they were in 2019.

The pandemic certainly helps, but don't forget:

Addictions are hard to break.

3) Through a combo of cult-like addiction & high entry costs, Peloton has a historically low churn rate.

How low?

A 3-yr average of .64% is lower than AT&T & Verizon, meaning you are more likely to switch cell-phone carriers than cancel your Peloton membership.

That's wild.

4) Going deeper on churn, check this out:

Over 90% of Peloton connected fitness subscribers keep their membership for 12 months or greater.

For traditional gyms, that number is closer to 60%.

My point?

Once a customer buys a Peloton, they aren’t leaving.

5) Now that we know Peloton's ability to retain customers, what about acquisition?

Here's Peloton's expansion playbook:

— Product Affordability
— Class Diversification
— Commercial & Geographic Expansion

The opportunity?

Disrupting the ~200M gym memberships worldwide.

6) From an affordability standpoint, Peloton has already introduced new financing options.

— $0 Down
— 0% APR
— $49/month for 36 months

The best part? It's working.

In 2020, 50% of the Peloton's bikes have been sold to households with <$100k in income.

Affordability = Scale

7) Along with making their products more affordable, Peloton has also expanded their content offering.

Current Offering:
— Cycling
— Running
— Bootcamp
— Strength
— Pilates
— Yoga
— Etc.

The result?

In 2017, ~95% of workouts were cycling — that number is now a more modest 64%.

8) By improving financing & diversifying workouts, Peloton has seen their demand skyrocket — the pandemic simply served as an accelerant.

Subscriptions & revenue are up over 200%, causing multi-month delivery delays for new customers.

The solution?

Infrastructure investment.

9) In addition to expanding in countries like Germany & Russia, Peloton is building out a collection of distribution centers in the US.

By 2022, Peloton expects to have the ability to service ~95% of the US population within 24-48 hours.

Even better, they're doubling down.

10) Peloton acquired fitness equipment manufacturer Precor for $420M yesterday — their largest acquisition ever.

Through the deal, Peloton will ease supply constraints by gaining access to over 600k sq-ft of manufacturing capacity in the US.

Next up - commercial expansion.

11) Through their $420M acquisition of Precor, Peloton will aggressively accelerate their commercial expansion timeline.

With 100 additional engineers & existing products, Precor enables Peloton to infiltrate hotel, university and corporate gyms in 90 countries around the world.

12) In a world with ~200M active gym memberships, Peloton’s 3M+ subscribers represent substantial progress & a significant opportunity.

Investors are happy with subs growing 107% CAGR, successful acquisitions, and infrastructure investments paying off.

YTD $PTON is up over 440%

13) Peloton's goal of 100M subscribers is certainly lofty, but its not impossible.

At-home fitness is set to dominate as the world becomes more digital and more remote.

Never bet against innovation. The future is here.

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