After enjoying close to a year of sizzling growth, Peloton Interactive, Inc. (PTON 2.85%) has hit a new hurdle following a recent wrangle with the Consumer Product Safety Commission over alleged potentially lethal safety issues with its Tread+ treadmill. Today, the exercise company's shares have dropped more than 4% after the media spotlight fell on a competitor, New York start-up Ergatta.
Ergatta is another home-workout company harnessing digital technology to give users a challenging, engaging experience. However, unlike Peloton, which focuses on exercise bikes and uses live-streamed or recorded workouts with instructors to motivate its users, Ergatta makes rowing machines. Its software aims at making a workout "feel" "more like playing a sport or a game," providing a "fitness gaming experience" including both solo and competitive modes.
Today, Ergatta made the news and sent Peloton's stock sliding by reaching a valuation of $200 million. The company announced the receipt of $30 million worth of venture capital financing this morning. Ergatta says it will use the money to create a wider variety of games and workout content for its service.
Multiple firms contributed to the funding, including Greycroft, whose co-founder Ian Sigalow remarked: "I've rarely seen a new consumer brand gain traction this quickly," as reported by Tech Startups. Courtney Robinson, a founding partner of major investor Advance Venture Partners, said Ergatta's "year one growth is a testament to both the demand for gamified fitness and their intimate understanding of the consumer demographic driving that demand."
Meanwhile, investors are watching Peloton for its potentially highly positive third-quarter fiscal 2021 earnings report due out next Thursday.