Peloton Interactive, Inc.: Valuation During a Global Pandemic


This case considers approaches to valuing Peloton Interactive, Inc. (NASDAQ: PTON), a manufacturer of home fitness products including bicycles, treadmills, and connected fitness subscriptions. In this case, Bainbridge Capital, a USD 540 million assets under management (AUM) investment fund, invested USD 4.3 million to acquire shares in Peloton’s initial public offering in September 2019. Less than a year later, in September 2020, sales of Peloton bikes and subscriptions have risen strongly, as fitness enthusiasts are forced into working out from home. The shares of Peloton have skyrocketed, more than doubling from their initial public offering price.

Lauren Truxton, an analyst at Bainbridge, is being asked to make a recommendation on whether the current valuation of the firm is sustainable, or is a temporary result of the Covid-19 shutdown that will reverse once gyms and fitness centers reopen. She needs to select an appropriate valuation methodology, considering not just the short history of the firm as a public company, but also the extreme market volatility as a result of the pandemic. Based on her analysis, Bainbridge will need to decide whether to sell their shares for a sizable capital gain or stay in the stock for the long term.

This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

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