As far as indoor cycling machines go, the $2,245 Peloton bike is nothing special. It has a sleek black and red frame. It has a big screen. It’s on Wi-Fi.
But a combination of aspirational infomercials (“This … is fitness evolved.”) and streaming classes taught by glamorous instructors has led Peloton to sell 577,000 of its bikes and treadmills in five years. Richard Branson is a fan. So are Jimmy Fallon, Kate Hudson and the Obamas.
Now as Peloton prepares to go public, the New York City-based company — which investors have privately valued at $4 billion — is facing questions about how long it can stay on top. Fitness is a historically faddish category. Exercise manias, from the Thighmaster to Tae Bo, have all come and gone. SoulCycle pulled its initial public offering entirely.
For Peloton, some troublesome signs have emerged. The company’s losses have more than quadrupled in the last year. It is embroiled in legal fights over music and patents. Competitors and copycats are moving in aggressively. And the boutique spinning craze has started to wane.
“Consumer fitness for at-home use has been through any number of cycles, going back to the 1990s when you had the ab roller,” said Michael Swartz, an analyst with SunTrust Robinson Humphrey.
Peloton, which made its offering prospectus public on Tuesday, declined to comment ahead of the I.P.O. In an interview last year, William Lynch, Peloton’s president, said the company had studied the fitness market’s “baggage” and determined that past crazes failed because they pushed empty claims about results.
Peloton, he said, is focused on bringing “serious fitness” into people’s homes in a “fresh and relevant” way with its growing library of classes. “We think if we do that, our members are going to stay with us,” he said.
Peloton was started, naturally, by a spin devotee.
John Foley, a tech executive who previously ran Barnes & Noble’s e-commerce business, founded Peloton in 2012 and became its chief executive. He was a fan of spin studios like SoulCycle and Flywheel, which became popular for their pumping music, camaraderie and energetic instructors.
But as a parent of two children, he found it difficult to get to spin class. So he created Peloton to bring SoulCycle’s vibe into people’s homes.
Mr. Foley, now 48, initially struggled to attract venture capital funding. For investors, scars lingered from Fitbit, the fitness tracking company that rode a wave of hype but stumbled under competition from Apple and Samsung.
“People were asking, ‘As an expensive hardware play, how big could that be?’” said Hans Tung, an investor at the venture capital firm GGV, which invested in Peloton last year.
In 2014, Peloton began shipping its internet-connected stationary bikes with a screen attached, charging $39 a month for access to streaming classes. Mr. Foley opened showrooms in shopping centers around the country, where people could test the bikes and the streaming classes.
Vicki Reed, a former head of marketing at Peloton who left in 2016, calls Peloton’s classes “exertainment,” meaning they are so engaging they distract people from what they’re doing.
“They were smart enough to grab it and go with it,” she said.
Sales quickly soared. Peloton’s spin instructors became stars, snagging endorsement deals and amassing social media followings. Lively online communities of riders sprang up, with people applauding one another’s workouts, gossiping about instructors and sharing fitness tips.
Jed Katz, a managing partner at Javelin Venture Partners who personally invested in Peloton in 2012, said he was surprised that a workout bike could “go viral so fast.” Peloton “became a ‘have to have’ product,” he said.
Crystal O’Keefe, 41, a Peloton owner in St. Louis, said she had made so many new friends through Peloton that she travels to New York several times a year for meet-ups. “It’s just a whole new family,” she said.
In its prospectus on Tuesday, Peloton revealed it lost $195.6 million in the fiscal year that ended June 30, compared with a loss of $47.9 million a year ago. Revenue rose to $915 million from $435 million over that same period.
There are now at least a dozen rivals that sell Peloton-style “studio” bikes for as little as $199.
A brand called Echelon, which has raised funding from the investment firm of Jay Galluzzo, a co-founder of Flywheel, offers a blatant knockoff, down to a round black logo, for $899.99. Lou Lentine, president of Echelon Fitness Multimedia, acknowledged the similarities with Peloton but said Echelon’s models were more affordable.
In August, Equinox, the parent company of SoulCycle, also announced plans for its own streaming indoor cycling and treadmill classes.
And Icon Health & Fitness, which owns NordicTrack and ProForm, sells internet-connected bikes with $15 and $39 monthly subscriptions for digital classes called iFit. NordicTrack’s bikes and treadmills, which automatically adjust speed and incline as part of its workouts, incorporate more technology than Peloton’s, said Colleen Logan, vice president for marketing.
“Theirs is really like an old-fashioned spin bike. You just, rrr, rrr, twist it with your fingers,” she said.
Icon is increasingly orienting itself around Peloton-style digital subscriptions. The 42-year-old company expects to one day make more revenue from streaming classes than from workout equipment, said Chase Watterson, iFit’s head of marketing. The digital classes now have 287,436 subscribers.
Other start-ups are mimicking Peloton’s model of combining different kinds of fitness equipment with a monthly streaming subscription. The start-up Hydrow, once known as Crew, is the “Peloton of rowing,” FightCamp is “Peloton for boxing,” and Mirror offers workouts on an internet-connected mirror. The companies have raised more than $160 million in funding.
“You name the sport and someone is trying to be the Peloton of that,” Mr. Katz said. The “Pelotons of X” even have their own copycats: Echelon sells a Mirror-like product called “Echelon Reflect.”
Last year, Peloton sued Flywheel, which introduced a competing stationary bike and streaming service, accusing it of violating patents it holds for technology on its bike. The lawsuit has yet to be resolved.
David Chene, a managing partner at Flywheel’s owner, Kennedy Lewis Investment Management, said Peloton “failed to disclose” its pending litigation, noting that the Patent Trial and Appeal Board stated that Flywheel has a “reasonable likelihood of prevailing” in its arguments against three of Peloton’s patents.
Bright-burning trends fade quickly. And spinning is not as hot as it was when Peloton got started.
In February, Randal Konik, an analyst with Jefferies, said an oversupply of spin studios in American cities had led some companies to reduce their prices. SoulCycle pulled its I.P.O. plans last year, citing market conditions. (The company declined to comment.) In May, Flywheel was taken over by creditors amid Peloton’s lawsuit over patent infringement.
To keep people from losing interest, Peloton has expanded into other areas, including a treadmill it began selling in 2018 for $3,995.
Last year, Peloton also offered subscriptions to digital classes for exercises like high-intensity interval training, barre, yoga, boot camp and meditation — no bike or treadmill required — for $19.49. It’s a bet that once someone enters the Peloton “ecosystem,” they will stay there for all their workouts. The company counts 102,000 digital-only subscriptions.
It’s hard to know just how many of its subscribers will stick with it. The company reported that less than 1 percent of its subscribers canceled each month on average. But half of its 511,000 subscribers have joined in the last year.
In the end, Mr. Tung said, “there are going to be copycats here and elsewhere, so it comes down to who can execute faster.”
For now, Peloton is in favor. The company can keep riding larger trends, like the boom in fitness spending and the popularity of social workouts, said Mr. Swartz of SunTrust Robinson Humphrey. Spinning may not be as hot as it was, but he said it “still has legs.”
That includes with Paul Gerhardt, 32, a tech entrepreneur in Oakland, Calif. He belongs to a group of 35,000 Peloton riders who do a rigorous style of classes called “Power Zone.” His bike is the first thing he sees when he starts his day and when he arrives home from work.
“Would I rather have the Peloton or Netflix?” he said. “I would rather have the Peloton.”