Netflix in the fitness industry hastily fell. Since the beginning of 2022, peloton, the once-hot American fitness platform, is experiencing a life-and-death disaster - the company's major layoffs, the CEO has been fired, the stock price has fallen to the bottom, hoping to seek to sell. Compared with its peak, Peloton's market value evaporated by nearly $40 billion (a total of about 250 billion yuan) this year, which is the worst company of the year. Just as the so-called success is also the epidemic, the defeat is also the epidemic. Founded in 2012, Peloton focuses on home fitness, and its core product is a self-developed spinning bike. Before the pandemic, the company was mediocre, with a market value that fell to billions of dollars at one point. Until 2020, the epidemic set off a wave of home, Peloton soared, up to $50 billion market value, but also quickly brought fire to the home fitness track.
However, the good times were short-lived. As the epidemic in Europe and the United States flattened and the number of homes decreased, Peloton began to plummet. And such a scene has also made domestic VCs begin to quietly pinch a sweat - in the past two years, the home track has also swept the domestic venture capital circle, Keep financing is hot, and a home fitness mirror track represented by FITURE has emerged. The fall of Peloton has undoubtedly cast a shadow over the home fitness track.
He made a spinning bike with a fire caused by the epidemic, sitting on a market value of 300 billion
Peloton's founders entered the fitness industry by accident.
Peloton's founder, John Foley, was over 40 years old when he started his business. According to the data, John was born in an ordinary working-class family and graduated from Georgia Tech. At the age of 25, he entered citysearch.com job, which also helped him enter Harvard Business School. When he graduated in 2001, John went to work at BMG Music. Later, John joined a large company, IAC, became an executive, and then jumped to the head of the digital marketing department of the established bookstore brand Barnes & Noble, whose competitor was the powerful Amazon.
Meanwhile, John noticed that boutique fitness was starting to catch on in New York. His wife is also a fitness enthusiast, often getting up at 6 a.m. to book the day's classes, but it is still difficult to grab popular classes. This gave John some inspiration, if you can create an online fitness experience platform, so that everyone can work out at home, so that they do not have to be limited by time and space. If it's big enough, people all over the world can get involved, and the business is full of huge imagination.
Just do it. In 2012, John resigned and founded Peloton. At first, he found several co-founders —Tom Cortese, Hisao Kushi, Yony Feng, and Graham Stanton. In 2013, John's team developed the first prototype peloton bike, and in 2014 launched its first networkable spinning bike.
Peloton's first investment was more than $200,000 that John raised from friends and relatives, and the project was valued at $1.6 million at the time. According to public reports, John was CEO at the time and had a team of 25 people. He went out to raise money during the day and cleaned his own office after work at night to save money on hiring cleaners in New York.
Peloton didn't win the favor of VCs in the first three years of his venture, but he persuaded 100 individual investors, each of whom gave him about $25,000-50,000, mostly his friends and friends. In this way, Peloton raised $10 million.
It wasn't until 2015 that Tiger Global Led Peloton's first round of institutional funding. Later, as Peleton rose to prominence, VCs who had not previously believed in Peleton began to realize that Peleton might be a revolutionary product and business model.
In April of the following year, Peloton raised $30 million in Series C funding from True Ventures and individual investor Bullish, and Tiger Global Fund continued to increase its size. In December of the same year, Peloton received another $75 million Series D funding from LVMH funds L Catterton and Bullish.
In May 2017, Peloton completed a $325 million Series E round, led by Kleiner Perkins and True Ventures, and joined the unicorns with a valuation of $1.25 billion.
In September 2019, Peloton officially landed on the NASDAQ at an issue price of $29 per share and a valuation of $8.1 billion. However, the leak came in the overnight rain, because relevant people, including many investors, were not optimistic about Peloton's business model, believing that Peloton had not really shown much advantage in the fitness industry. In just one week, Peloton's market value evaporated by nearly $1.8 billion.
This embarrassing situation lasted for about a year. But later developments, probably no one expected that Peloton unexpectedly ushered in a soaring opportunity.
In 2020, the new crown epidemic was raging, a large number of gyms were closed, and people working from home became the mainstream, but Peloton was inexplicably on fire, and really enjoyed the dividends brought by the epidemic. Peloton's fourth-quarter 2020 earnings report showed that Peloton's revenue for the quarter was $607.1 million, an increase of 172% year-on-year, and revenue was 24% higher than the company's post-IPO expectations. It was also peloton's first ever profitable quarter.
Of course, Peloton's number of subscribers is also growing rapidly, with more than 1.09 million fitness subscribers, up 113% from the same period in 2019, and the total number of members is just over 3.1 million, including users who only pay for digital subscriptions. A letter to shareholders from Peloton read: "Driven by the COVID-19 pandemic, member engagement hit a new high, with 164 million related fitness subscription training sessions completed in fiscal 2020. ”
A sudden outbreak brought Peloton back to life. Peloton products include spinning bikes, treadmills and content subscription services for $1,995, $3,995 and $39/month, respectively. Peloton allows users to exercise on a bicycle or treadmill without leaving home, the equipment can be directly connected to the online live classroom, the user can choose the course according to their needs, and there are star coaches for online supervision and guidance.
Subsequently, Peloton exploded across the United States. Some people in the industry even said that the emergence of the Peloton model is the best supplement to the fitness industry that used to be dominated by offline venues in the past. At the same time, Peloton ushered in a staggering surge, and its market value soared wildly, once reaching $50 billion (about 310 billion yuan), which was breathtaking.
Too fast, falling 250 billion a year
Hurriedly falling
However, relying on the business brought by the epidemic at home, it has come and gone in a hurry.
This is reflected in Peloton's stock price. After a crazy 2020, Peloton's stock price has been falling all the way in 2021, with the latest price of $34.68 per share, compared with the previous high of $155.52 per share, a decline of more than 75%. At its craziest, Peloton's market capitalization was as high as $50 billion, and now it has evaporated nearly $40 billion (about 250 billion yuan), which is lamentable.
Peloton's situation is getting worse and worse. On February 8 this year, Peloton announced that the company will reduce about 2,800 jobs worldwide, with a layoff ratio of about 20%. The layoffs were due to Persistently poor Peloton performance, with sales of its connected fitness equipment falling 17% year-over-year in the third quarter of 2021 alone.
To make matters worse, there are reports that Peloton is considering temporarily discontinuing the company's proudest spinning bike. According to internal documents obtained by CNBC, Peloton plans to suspend production of its most classic spinning bikes for two months from February to March this year.
The decline in performance has made changes within the company. On Jan. 24, Jason Aintabi, a major shareholder of Peloton and chief investment officer at hedge fund Blackwells Capital, publicly expressed concern about Peloton's operating conditions, saying that the board should consider selling the company, in addition to demanding that John Foley be immediately removed as CEO, while pointing out four potential buyers: Nike, Apple, Disney and Sony.
Is Peloton's era really over? The data shows that after gyms have gradually opened their doors in recent months, consumers don't seem to need to spend so much money on home fitness equipment.
Affected by the epidemic more than a year ago, there was too much demand for Peloton's products. At the time, Peloton remained ambitious — in December 2020, it announced its $420 million acquisition of fitness equipment maker Precor, giving it more than 625,000 square feet of production space. By May, Peloton had also spent $400 million to build its first plant in the U.S. to speed up production of its spinning bikes and treadmills.
But now that the epidemic in Europe and the United States has been flattened, the era of home has passed, and the home fitness equipment produced by Peloton with full horsepower can no longer be sold.
It is touching that Peloton has created a home fitness outlet on the other side of the ocean by relying on the epidemic. But now, it all seems to have come to an end in a hurry, leaving a field of chicken feathers.
Will such a scene be repeated in China?
Looking at Peloton's ups and downs, domestic investors seem to be sweating.
As everyone knows, in the past few years, more than 300 fitness apps have also been born in China, all of which are similar to Peloton's model - hoping to leverage the entrance of family fitness with the help of the "product + content" model. Until the epidemic came and Peloton's overseas market value soared, the domestic home fitness track was also hot.
At the beginning of 2021, Keep, the first unicorn in the fitness industry, announced the completion of a $360 million Series F financing, which was led by the SoftBank Vision Fund, followed by Hillhouse and Koutu Capital, and continued to pursue investment by old shareholders such as BAI Capital, GGV Jiyuan Capital, Tencent, Wuyuan Capital and Times Capital. Since then, Keep's valuation has successfully crossed the $2 billion mark and become a recognized unicorn in the field of domestic sports technology. It is worth mentioning that in May 2020, Keep officially announced a Series E financing of $80 million, with a valuation of 1 billion. In other words, the company's valuation has doubled in less than a year.
Before the pandemic, however, Keep went through a period of lows. In 2019, Keep is already the first app in the fitness field for user data, but it is difficult to break through the millions of daily active data. This year, Keep did not officially announce any round of financing. Until the sudden outbreak of the epidemic broke the trap of keeping - bringing a surge in new user data. According to the "2020 China Home Fitness Short Report", keep downloads increased by 478%, and the number of monthly active users of online fitness APP continued to remain high.
In fact, home fitness during the epidemic has also swept the domestic venture capital circle. As we can see, one of the hottest unicorns in 2021 is the home fitness track - FITURE, which is popular by a fitness magic mirror. In March 2019, two entrepreneurial veterans, Tang Tianguang and Zhang Yuansheng, founded the home technology fitness brand Film, and the core product is a fitness mirror called FUTURE.
Here's a small detail – a well-known DOLLAR VC had questions about the unprecedented nature of the project when it first due diligence, and he hereby consulted colleagues at the US headquarters. Later, the colleague's advice was: "This track must not be missed. "Previously, the team had missed Peloton, who was red and purple from the impact of the epidemic. In April 2021, after FITURE completed the Series B financing, the valuation reached 1.5 billion US dollars (nearly 10 billion yuan), and it is reported that VCs competed fiercely for share at that time.
The popularity of FITURE has also brought fire to the domestic fitness mirror track. In the short months that followed, more than a dozen fitness mirror brands emerged in China. Giants such as Huawei, Suning, Haier, and Baidu have released products with similar functions to cut into this market. There are more rumors in the industry that "there are dozens of companies in Shenzhen that are doing smart fitness mirrors".
Prior to this, the domestic VC circle also prevailed in a view: home fitness is becoming a way of life for people, and will become mainstream in the future. Along this logic, we have seen the birth of a sum of financing, the emergence of star unicorns, and countless VCs/PE squeezed onto this track.
But it turns out that when the epidemic improves, people are still willing to go offline. The current situation shows that home fitness may be a pseudo-demand. As a Beijing gym owner said bluntly, in essence, the main battlefield of fitness is offline, and online is just the icing on the cake, "Online fitness is too boring, and it takes a lot of effort to overcome inertia." ”
And Peloton's dismal encounter has punctured the truth of home fitness. Will the same scene be staged in China?