What’s going on?

• Peloton (American exercise equipment and media company) reported worse-than-expected results, as the latest fitness fad once again ran out of puff.

What does this mean?

• As gyms re-open in Q2, at-home exercise equipment became less attractive and Peloton’s revenue growth dropped dramatically. Along with an expensive treadmill recall, Peloton posted a bigger-than-expected loss.
• Peloton wasn’t optimistic about Q3 either:
  • The price of its exercise bikes was slashed by around 20% in an attempt to attract customers
  • It’ll be shifting back toward less-profitable treadmills.
  • It’d found a problem with the way it’s been valuing its inventory. Previous financial reports won’t be changed, but it’s bound to make investors sweat out.

Why should I care?

The bigger picture: Back to normalcy is not ideal for everyone

Peloton had a good year in 2020 as people took to exercising at home during lockdown, and its shares rose more than 400%. But after the announcement of the disappointing results, its stock plummeted almost 10%.

Zooming out: Now face the war

• Last year, Peloton was playing alone in itss “connected fitness” market. But for now, it has to compete directly with Hydrow, Tonal, and Lululemon-owned Mirror. And those rivals are already starting to push Peloton to its limits:
  • Exercise bike price was cut for the 2nd time in less than a year,
  • Peloton spent almost 3 times as much on sales & marketing in Q2 compared to the same time last year.

Content source: Finimize (2021) Dead Trend. Available at: https://www.finimize.com/wp/news/dead-trend/ [Accessed on Sep 1, 2021]