Peloton (PTON) to Launch in Australia in H2 2021, Analysts See Expansion as a Sign of Supply Chain Improvement

March 9, 2021 8:44 AM EST
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Peloton (NASDAQ: PTON) announced it will expand to Australia in the second half of this year. The company will offer its Peloton Bike, the Peloton Bike+ and the Peloton App to its Australian customers.

Besides an online push, PTON is also planning to open showrooms across key Australian cities, including Sydney and Melbourne.

"Health, fitness and sport is a central part of Australia's DNA, which is why it was a natural decision to launch Peloton in Australia as our first foray into the Asia Pacific region," said Kevin Cornils, Managing Director, International for Peloton.

"Our global growth is fuelled by our passionate, growing community of over 4.4 million Members who choose Peloton as their go-to fitness solution, anytime, anywhere. We cannot wait to share more details in the coming months about how Australians can experience what has become a global fitness phenomenon."

The company will price its Peloton Bike and Bike+ at $2,895 and $3,695 AUD respectively. The All-Access Membership will cost $59 AUD per month.

BofA analyst Justin Post sees this move from PTON as a signal in the company’s confidence in overcoming supply issues by the second half of this year.

“Australia is relatively close in geographic location to Peloton’s factory in Taiwan, so launch is not a complete surprise. According to IBISWorld, the market size measured by revenue of the Gyms and Fitness centers industry in Australia is $2.3bn in 2021 vs UK at $2.2bn. Per Fitness Australia, Australia had more than 4mn gym members in 2020 (vs 90mn+ in existing countries of operation),” Post wrote in today’s note sent to clients.

“While Australia adds just 5% to Peloton’s addressable gym member TAM, pre-pandemic, up to 50% of Peloton new subscribers did not belong to a gym and Peloton could also see traction with non-gym members in Australia. We also view this expansion into Australia as a first step into APAC region (easiest due to existing content in English), with more markets likely coming.”

Post has maintained a “Buy” rating on PTON despite a 32% drop in the price action in the past four weeks, as he sees a robust product pipeline.

Rosenblatt analysts also maintained a “Buy” rating on PTON following news on Australian expansion.

“We see this expansion as a byproduct of falling wait times in the US which is a key focus and area of investment for the company and has positively manifested itself in shorter delivery windows over the past two weeks. Going forward, we expect Precor to be a significant driver in PTON's ability to expand globally in an asset light way,” the bank’s analyst Bernie McTernan said in a note to clients.

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