Uber (UBER) and Lyft (LYFT) have seen their stocks obliterated since their overhyped IPOs earlier this year. WeWork, another insanely valued unicorn, saw a series of valuation haircuts in the weeks before an IPO that never happened.
In the eyes of veteran executive and Peloton President William Lynch, the self proclaimed seller of happiness (hey the S-1 says that) is not like any of those loss generating, buzzy tech startups. While Peloton (PTON) has yet to turn a profit in its more than five years in business, Lynch believes they are in the right sector at the right time.
The profits will come, he thinks.
“The macroeconomic environment has been difficult, and there has been a lot publicized about those other [tech] companies. We feel like we are unique in a lot of ways. One, we are category one in the valuable connected fitness market which we pioneered. Two, if you look at our unit economics it’s one of the best business models I have seen in several decades of running consumer businesses. And we are a disruptor in a valuable category like fitness — there are 63 million people in the U.S. that go to gyms and are looking for a better way to work out and we believe that Peloton delivers that better experience,” Lynch told Yahoo Finance fresh off of Peloton’s first stock trade at the Nasdaq Thursday.
Even still, the Peloton team has some proving to do. For starters, Peloton’s stock fell about 8% Thursday to $26.70 in its first few hours of trading. The company priced the stock at the high end of a $26 to $29 range Wednesday evening.
It will be important for Peloton to hold a solid first earnings call in the coming weeks to shore up any doubt among investors. That will be especially key as Peloton is likely to continue to notch losses for the next several quarters.
Recall Peloton delivered $915.9 million in sales for the fiscal year ended June 30. But it lost a whopping $202 million as it ramped up marketing costs to attract new users beyond simple word of mouth and product development.
“People see them as losses, we seem them as opportunities,” Lynch said.