today is Aug 14, 2022

Few brands stood to benefit from a planet full of people stuck in their homes more than Peloton. However, the question of whether that burst in business could be sustained was partly answered last week after the company reported that its sales were lagging, causing shares to fall by 35% and wipe more than $9 billion off its market value.

The quarterly earnings report said that revenue grew by just 6%—much less than anticipated—and that sales for stationary bikes and treadmills had dropped by 17%. Chief financial officer Jill Woodworth told analysts that it’s “clear that we underestimated the reopening impact on our company.”

Wall Street, meanwhile, has responded this morning by continuing to get rid of shares, which have crashed another 11% as of midday Monday.

In a reopened world, more people are clearly eager to head back to the actual gym. As Peloton was releasing its dismal earnings report, Planet Fitness was busy announcing that its gym membership levels have almost returned to their pre-pandemic peak (nearly 16 million), bringing its stocks up by 25% for the year.

There were signs that this market correction was overdue. In August, Peloton slashed the price of its cheapest bike by 20%, to $1,495. In the new earnings report, the company admitted sales of that budget bike have also “not met our initial expectations.” Peloton executives didn’t hint at what sorts of pivots could be on the horizon, but it’s fair to assume some evolution in the pipeline. Here are some of the possibilities.

Expand the Peloton fitness universe

The company is reportedly preparing to release a rower and a strength-training device to complement its bikes and treadmills. Other at-home workout brands that flourished during the pandemic aren’t seeing the same kind of collapse as Peloton (not yet, anyway). Tonal, the wall-mounted weight machine endorsed by LeBron James, is still having a moment. As is Hydrow, maker of the $2,295 in-home rower. Peloton CEO John Foley gave an interview earlier this year where he teased that new hardware was being developed to compete with these new home gym products. Peloton’s creep into adjacent exercise categories might give users a reason to not just stick around, but pay even more than $39 a month for its unlimited class subscription.

Tap into the (still strong) fitness-wearables trend

For months, there have been reports of an imminent new accessory—the Peloton Heart Rate Band—that’s already been tested with members. Analysts have estimated the wearables category will grow by almost 20% this year.

Move outside of the home

Peloton already operates a handful of studios where people can train in person with instructors. Both analysts and diehard fans see this as a promising area for expansion, especially now that Peloton has a burgeoning yoga arm. Funny enough, Equinox, which had a rough early pandemic, is reportedly once again in talks to take itself (and subsidiary SoulCycle) public in a SPAC deal that led to a $7.5 billion valuation. SoulCycle’s new CEO, Evelyn Webster, has unveiled several changes since taking over in 2021, and perhaps the biggest is a plan to try to convert the cult-like following for in-person classes into brand loyalty at home, too. This spring, it introduced a stationary bike to compete directly against Peloton.

","

There were signs that this market correction was overdue. In August, Peloton slashed the price of its cheapest bike by 20%, to $1,495. In the new earnings report, the company admitted sales of that budget bike have also “not met our initial expectations.” Peloton executives didn’t hint at what sorts of pivots could be on the horizon, but it’s fair to assume some evolution in the pipeline. Here are some of the possibilities.

","

Expand the Peloton fitness universe

","

The company is reportedly preparing to release a rower and a strength-training device to complement its bikes and treadmills. Other at-home workout brands that flourished during the pandemic aren’t seeing the same kind of collapse as Peloton (not yet, anyway). Tonal, the wall-mounted weight machine endorsed by LeBron James, is still having a moment. As is Hydrow, maker of the $2,295 in-home rower. Peloton CEO John Foley gave an interview earlier this year where he teased that new hardware was being developed to compete with these new home gym products. Peloton’s creep into adjacent exercise categories might give users a reason to not just stick around, but pay even more than $39 a month for its unlimited class subscription.

"],["

Tap into the (still strong) fitness-wearables trend

","

For months, there have been reports of an imminent new accessory—the Peloton Heart Rate Band—that’s already been tested with members. Analysts have estimated the wearables category will grow by almost 20% this year.

","

Move outside of the home

","

Peloton already operates a handful of studios where people can train in person with instructors. Both analysts and diehard fans see this as a promising area for expansion, especially now that Peloton has a burgeoning yoga arm. Funny enough, Equinox, which had a rough early pandemic, is reportedly once again in talks to take itself (and subsidiary SoulCycle) public in a SPAC deal that led to a $7.5 billion valuation. SoulCycle’s new CEO, Evelyn Webster, has unveiled several changes since taking over in 2021, and perhaps the biggest is a plan to try to convert the cult-like following for in-person classes into brand loyalty at home, too. This spring, it introduced a stationary bike to compete directly against Peloton.

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