I'm guessing somewhere in-between. Their subscription revenue is only 20% of sales, and their churn could be a lot higher than what they are letting on due to their financing terms. They offer 3 years of financing, which includes the monthly subscription fee, so once expire, what will their churn really be? Granted their target market are higher-income people, but it seems like their target market will be small.

My belief is that most people who get this will either be exercise fanatics (not too many of those out there), or they will likely eventually give up on exercising like most other people who try it. And if they give up on exercising, I highly doubt they will allow Pelaton to keep on charging them at $40 per month. This is no Planet Fitness where it's only $10 per month so most people don't even bother canceling. But at almost $500 per year, I am betting more people will cancel. And I didn't even get to its valuation, which will likely be way too high. But does that mean I won't speculate on an initial IPO pop? Nope.