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PELOTON PLUNGE

Peloton’s earnings show Americans may be abandoning at-home workouts

A close-up of a Peloton exercise bike with the company's logo.
Reuters/Shannon Stapleton
Putting the Peloton in storage.
By Courtney Vinopal
Published Last updated

Americans are hopping off their stationary bikes and getting back into the world after a year of at-home workouts—at least that’s what Peloton’s latest earnings suggest.

The stationary bike company’s stock dropped by more than 30% today (Nov. 5) after it reported a slump in revenue and cut its annual forecast by more than 10%. Sales of the bike, whose sticker price is just shy of $1,500, surged during the first months of the covid-19 pandemic and made the company one of the highest-returning US-listed stocks in the US last year.

“Stay-at-home and work-from-home orders, coupled with commercial gym closures drove massive awareness gains for connected fitness,” CEO John Foley said on the Nov. 4 earnings call. But he added the company expected their transition from the pandemic to be challenging, “and that has certainly proven to be true.”

Sales of the Peloton’s stationary bike fell by 17% as pandemic lockdowns lifted last quarter, while its revenue grew by a lower-than-anticipated 6% to $805 million. Jill Woodworth, the company’s chief financial officer, said it’s clear Peloton “underestimated the reopening impact on our company and the overall industry.”

Peloton users are working out less often

Peloton subscribers have been using the company’s connected fitness subscription less frequently since the beginning of this year. Since January average monthly workouts on the app—which in addition to spinning offers strength training, yoga, and running—have fallen from 26 to 16.6.

While the company has users in North America and Europe, much of its revenue is concentrated in the US, where gyms began re-opening last fall after statewide lockdowns kept many of them from doing business in-person. Gym owners in the US saw subscriptions go up in January, boosted in part by a pivot to online offerings. But despite its absurdly long waitlist, Peloton struggled to connect with consumers as lockdowns lifted, and slashed the price of its bike by $400 in August after its earnings report showed slower growth in the quarter ending this June.

The company also had to recall more than 125,000 of its treadmills in May after reports emerged that children were being injured by them. Treadmill sales, though, represent just a small portion of Peloton’s sales.

A return to the gym?

As Peloton stock dropped, shares of gym chain Planet Fitness jumped 13% after it reported better-than-expected earnings. In a Nov. 4, call CEO Christopher Rondeau said membership levels reached 97% of their all-time peak last quarter as more than 15 million people joined Planet Fitness and the number of franchises grew. This helped the company’s revenue grow by more than 46% from the previous year.

It’s a reversal of fortunes for the chain, which saw its stock drop from $88 to $24 a share in March 2020. The surge in revenue also suggests that Planet Fitness’s low-cost subscriptions—which run as low as $10 a month—are an easier sell than the $39 a month it costs for Peloton rides.

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