How “WellTech” Is Creating A New Wave Of Tech Fortunes
“It must be poorly built if you’re charging $1,200 for it. We charged $2,000 dollars for it, and sales increased.”
That’s what the CEO of Peloton (PTON) said was the early decision that changed the company’s future.
Today Peloton is a household name.
It has more than one million subscribers to its online fitness classes.
Its stock is up 456% in the past year.
And the company’s greatest problem is a great problem to have.
According to Peloton’s Customer Support page:
Due to increased demand, Bike, Bike+, and Tread+ orders placed today will have a 4-9 week delivery timeframe in some areas.
In other words, Peleton can’t keep up with demand.
But here’s the thing. Peloton is just one rider on an exponentially larger wave that’s going to make a lot of investors a lot of money in the years ahead.
Goldman Sachs Analyst And His Huge “But”
The merging of the wellness industry and technology and is called WellTech.
The combination is the driving force behind a new — and growing — wave of tech fortunes.
Just listen to an analyst who caught onto the potential of Peloton early to understand why.
Heath Terry, the analyst at Goldman Sachs who covers Peloton, recommended it as a “Buy” a year ago before it climbed more than 400%.
He recently officially downgraded Peleton’s stock from “Buy” to “Neutral” after it’s rise.
After such a big run for a stock, this isn’t necessarily bad.
It sometimes just signals a company has saturated a market and growing a customer base from here is going to slow and costs of acquiring new customers is going to rise.
Or, in this case, Peloton may not be able to grow fast enough because of not having enough supply to meet demand.
That’s why he added this statement in his downgrade of Peloton’s stock:
“We continue to believe in the long term opportunity and Peloton and expect that the current pandemic will continue to both accelerate and steepen the adoption curve for the company’s leading connected fitness products.”
The last part there is the key – connected fitness products.
This is a rapidly growing market and Peloton astonishing success is just one part of it.
The Netflix-Sized Tech Takeover Of Fitness
Peloton is part of the health and wellness industry.
The company successfully combined wellness and technology, but it won’t be the last.
Peloton has recently targeted getting 100 million subscribers to its exercise media services.
The company estimates there are more than 200 million potential customers for active, connected health and wellness software.
The opportunity is too great to pass over and Silicon Valley isn’t passing over it either.
According to researchers Kaleido Insights, venture capital firms invested more than $2 billion last year into WellTech.
This year, after the wild success of Peloton and others, the investments will be even higher.
But again, this is really just the starting point for WellTech.
Think of it like Netflix (NFLX).
The streaming giant hit one million subscribers in 2003 and, after adjusting for splits, its stock was around $4.00 per share.
Today it has more than 195 million subscribers and is trading at more than 100X more than that at $488 a share.
The rise of WellTech has the same potential growth as technology disrupts the entire wellness industry.
And with an estimated global size of $4.3 trillion, you can bet there will be many more fortunes made.
So if you missed out on Peloton, there are going to be many more that come along the way and this is a trend Dear Retail is going to be watching closely in the years ahead.
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