PTON
Peloton Interactive Inc
Price:  
7.60 
USD
Volume:  
17,916,380.00
United States | Leisure Products
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Peloton WACC - Weighted Average Cost of Capital

The WACC of Peloton Interactive Inc (PTON) is 11.4%.

The Cost of Equity of Peloton Interactive Inc (PTON) is 10.10%.
The Cost of Debt of Peloton Interactive Inc (PTON) is 14.35%.

Range Selected
Cost of equity 8.80% - 11.40% 10.10%
Tax rate 0.50% - 1.60% 1.05%
Cost of debt 4.80% - 23.90% 14.35%
WACC 7.5% - 15.4% 11.4%
WACC

Peloton WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.08 1.18
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.80% 11.40%
Tax rate 0.50% 1.60%
Debt/Equity ratio 0.48 0.48
Cost of debt 4.80% 23.90%
After-tax WACC 7.5% 15.4%
Selected WACC 11.4%

Peloton's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for Peloton:

cost_of_equity (10.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.08) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.