Why Peloton Interactive is just the latest hula-hoop
We’re currently witnessing a bubble in profitless start-ups funded by private equity. The only questions that remain are what will pop it, and when will it pop? The upcoming IPO of indoor fitness company, Peloton Interactive, is a case in point.
One of the biggest concerns I have about the current asset boom is that a significant concentration of money has flowed from ultra-high net worth private equity investors into the bank accounts of profitless technology companies. The issue arises because many of these ‘unicorns’ – companies with billion dollar plus valuations – have no clear or obvious path to increase revenue, or cut costs, enough to begin generating profits sufficient to justify their low-interest-rate-fuelled market values.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
MICHAEL BARRETT
:
Totally agree with you on this one Roger. I read a summarised version of the prospectus, then went to their website to understand more about their product and to have a look at their “celebrity” personal trainer videos and walked away asking myself whether I was the only one who couldn’t see the long term value proposition?
Without giving the game away (!), I’m old enough to have been through the Richard Simmons/Jane Fonda home workout video era. Peloton seems to me to be an updated version of those fitness fads.
The only opportunity I can see with Peloton is a business collecting and disposing of old Peloton bikes (US$2295 for a stationary exercise bike – really?) after everyone has moved on to the next fitness fad…
Roger Montgomery
:
Sounds like you are ahead of the curve Michael – Get those tipper-trucks and slip-bins lined up for the new collections service.