Peloton Loans a Stable Income Source for Investors

    • Peloton's zero-interest customer loans, handled by Affirm, are often packaged and resold to investors.
    • The loans are seen as very stable and offer a low rate of return.

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Peloton has had a dramatic year, but its financing options are nonetheless prized for their stability by the banking industry.

Peloton contracts with lender Affirm to offer zero-interest loans on its connected bikes and other fitness machines, which are then often packaged and sold to financial institutions in search of a safe bet.

  • Peloton, Affirm’s biggest client, generated around 20% of the lender’s $870.5 million in revenue for the fiscal year ending June 30.
  • Unsecured loans to Peloton customers formed the bulk of the $845 million Affirm has garnered since 2020 from packaging zero-interest loans. The interest from these loan packages starts at just over 1%.
  • In August, the at-home fitness giant lowered the price of its signature bike to $1,495 from $1,895. Its treadmill retails for $2,495. It resumed treadmill sales on Aug. 30, following a costly recall. 

The company recently released its own apparel line and is believed to be working on a rowing machine.

While Peloton’s revenue related to product sales dipped in the second quarter, subscriptions to its workout service have grown steadily.

The company more than doubled its connected fitness subscribers to 2.3 million in the fiscal year ending June 30, bringing in $541.7 million from that segment.