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Peloton’s Climb to a Public Company

March 15, 2019, 12:00 PM UTC

By now you’ve seen the ads. A trim young professional is riding an exercise bike in a perfectly appointed high-rise apartment, his face lit by the glow of a tablet in front of him. You can’t hear the instructor on the screen, but you can imagine the sort of motivational spiel being called out to the riders.

This is Peloton, and it’s the biggest thing in home exercise since Jane Fonda in leggings. The company, founded in 2012, sells its proprietary bike for $2,245 and a monthly subscription to video streams of its live and on-demand classes for $39. Last year it introduced a $4,295 treadmill and expanded its class offerings.

A marketing blitz has pushed Peloton’s user base past that of rival SoulCycle. According to credit card transactions analyzed by Second Measure, Peloton eclipsed SoulCycle in 2018. Peloton hasn’t released user numbers but says it doubled its subscribers last year.

Now Peloton is preparing to do what SoulCycle backed out of doing in 2018: go public. When it files, analysts will be keen to learn the margins on both its high-priced equipment and subscriptions. It’s that combination that has been irresistible to investors. The company has raised just short of $1 billion in private money, with a valuation as of its last round of $4 billion.

With further growth, user retention will be key. Peloton instructors, social media celebrities in their own right, do an impressive job at keeping home riders engaged. But as classes balloon in size, they risk losing that personal touch.

If it can keep that boutique-class feel, even as 10,000 people ride along concurrently, Peloton will continue to lead the pack.

A version of this article appears in the April 2019 issue of Fortune with the headline “Peloton’s Climb.”