Written by Stephen Gandel
Fitness industry phenomenon Peloton boasts financial statements with the type of fast-paced sales growth that gets investors’ hearts pumping. Revenue from sales of its $2,245 home-exercise bicycles and $4,295 treadmills and $39-a-month streaming video workouts has more than doubled to $900 million in the past year.
Peloton hopes to ride that growth this week with an initial public offering that would value it at as much as $8 billion and potentially make it one of the most successful IPOs of 2019. In their Nasdaq market debut on Thursday, the company’s shares closed at $25.76, down 11% from an opening price of $27. Peloton had sold shares to initial investors for $29 each Wednesday night, the high end of its expected range.
The problem: Peloton’s revenue growth is not as straightforward as it appears to be, according to a CBS MoneyWatch review of the company’s financial statements in its IPO documents and interviews with accounting and business experts. Instead, much of Peloton’s growth is fueled by zero-interest loans and aggressive financial assumptions that don’t make clear to would-be investors the risks and potential losses to Peloton if those loans go bad.
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