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Peloton has nearly $2 billion in cash — and it plans to spend it

Brian Sozzi
·Editor-at-Large
·2-min read

Peloton founder and CEO John Foley is well aware of the impressive amount of cash he has on the balance sheet ($1.8 billion to be exact) and little debt (just $508.2 million in lease liabilities related to Peloton’s retail stores, studios, new HQ, etc.).

Although Foley isn’t inclined to immediately blow a chunk of the cash acquiring some buzzy new fitness hardware upstart, he is cognizant of the need to put it to work to generate future returns. Investors should just expect a more methodical approach to capital allocation in keeping with the company’s philosophy.

“The challenge is that there's not that many awesome innovative technology companies in the fitness category or around the fitness category,” Foley tells Yahoo Finance when asked if Peloton will be an industry consolidator.

“So one of the reasons why Peloton is doing well is just there hasn't been that much innovation, or capital or software or content for that matter going into the fitness category. So we will keep our ear to the ground. We will be acquisitive when it makes sense, but it's it's a more shallow pool of targets than you want it to be.”

LAS VEGAS, NV - JANUARY 11:  Maggie Lu is reflected in a touch screen as she demonstrates how to select a class on a Peloton Tread treadmill during CES 2018 at the Las Vegas Convention Center on January 11, 2018 in Las Vegas, Nevada. The USD 3,995 workout machine is expected to be available later this year and features a 32-inch touch screen that connects users to instructors giving live or on-demand fitness classes. CES, the world's largest annual consumer technology trade show, runs through January 12 and features about 3,900 exhibitors showing off their latest products and services to more than 170,000 attendees.  (Photo by Ethan Miller/Getty Images)
Maggie Lu is reflected in a touch screen as she demonstrates how to select a class on a Peloton Tread treadmill during CES 2018 at the Las Vegas Convention Center on January 11, 2018 in Las Vegas, Nevada. (Photo by Ethan Miller/Getty Images)

Foley has pulled the trigger on two acquisitions, however.

While the acquisitions aren’t the headline grabbing purchase of, say, a Hydrow (or a Lululemon plunking down $500 million for Mirror this year) they do support key Peloton areas such as content creation and manufacturing production.

Nearly two months after going public, Peloton acquired one of its bike manufacturers Tonic Fitness Technology in Taiwan. The purchase — which cost $47.4 million —will help Peloton better control its flow of products to market. That will prove critical as Peloton moves to expand its product line as it has done recently with the introduction of revamped bike and a cheaper treadmill. It marked the company’s second acquisition.

Back in June 2018, Peloton made its first acquisition — scooping up digital music aggregator Neurotic Media for an undisclosed sum.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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