(Bloomberg) -- Before IPO investors decide what Peloton Interactive Inc. is worth, they'll need to decide what it is.
Peloton's prospectus, filed Tuesday evening, opens by arguing that the home-exercise startup belongs in each of eight distinct subsectors: from technology and media to software and product design to social connection, retail, apparel and logistics. Buyers will spend the coming weeks weighing that pitch as they figure out for themselves how to value the latest unprofitable firm to seek an IPO valuation in the billions of dollars.
“It's GoPro meets Fitbit meets Yeti meets Canada Goose,” Rett Wallace, chief executive of Triton Research Inc., said in an interview. “This will give the bulls and bears ammo to throw at each other. And Peloton will argue it's greater than the sum of its parts.”
In a funding round a year ago, Peloton was valued at about $4.15 billion. People familiar with Peloton's plans have said it is seeking a valuation of $8 billion or more when it goes public.
Read more: Peloton Interactive Touts Software, Apparel Trade: IPO Tearsheet
Valuation may ultimately turn on how far into the future investors are looking, as Peloton has a transformation ahead of it. The prospectus revealed that Peloton is still very much oriented toward selling more bikes, Wallace said.
”I was surprised at how much of the revenue mix is still hardware,” he said. “And at $2,000, those bikes will be replaced or upgraded never. So the ongoing opportunity is all the subscriptions.”
To contact the reporter on this story: Drew Singer in New York at dsinger28@bloomberg.net
To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Jeremy R. Cooke
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