This Key Metric Should Get Peloton Investors Excited
Few companies can credit the COVID-19 pandemic for boosting their businesses quite like Peloton (NASDAQ: PTON) can. Shares of the high-end fitness equipment maker have more than tripled since its IPO 12 months ago, catapulting the company to a $25.9 billion valuation.
As consumers shifted behavior due to shelter-at-home orders and are still hesitant to visit their local gyms, the health crisis has created the perfect environment for Peloton to thrive. While sales and subscriptions grew at an impressive clip in the fiscal fourth quarter and remain the figures most investors pay attention to, I want to focus on one of the most important and often overlooked metrics -- unit economics.
Dissecting the unit economics for Peloton means taking a look at the lifetime value of a customer compared to the cost of acquiring that customer, where a ratio higher than one is better. It might sound complex, but it's actually quite simple. Peloton's core customers in this instance are its Connected Fitness Subscribers -- those who purchased a piece of equipment and who pay the $39 monthly fee.
Source Fool.com
