Facebook Instagram Twitter LinkedIn Blog

Should I ride the rise of Peloton stocks?

Peloton (PTON:NASDAQ), a ‘stay-at-home stock’, has become quite the Wall Street darling since the introduction of pandemic-induced restrictions.

Despite releasing a controversial 2019 Christmas ad which the media labelled as sexist, Peloton made a great comeback in March 2020 – the very start of the COVID-19 crisis.

As a radical change of habits and mentality towards work, travel, socialising and, most importantly, fitness swept over, Peloton gained some serious stay-at-home momentum.

With gyms a no-go, and to an extent, the outdoors, home workouts became the next best thing to maintaining mental and physical health at such a challenging time.

From boutique fitness at home to global community

Peloton provides its customers with a wide range of products and services which, admittedly, are expensive to buy. However, Peloton’s offerings are still considered to be a good investment, and the company’s rapid subscription growth is a testament to how many people will agree.

However, one thing that’s particularly significant about Peloton is its focus on the community concept.

The company’s commercial aim is to enlarge, engage, support, inspire and empower the owners of its products and subscribers. Riders are encouraged to share and celebrate their own milestones (largely through ‘virtual high fives’), and trainers will congratulate them on reaching their targets.

By introducing a new fitness concept – connected fitness – the company has developed its identity by bringing the Peloton community to the forefront. However, it’s worth noting that the Peloton community is widely dubbed a ‘cult’ by spectators due to its many zealous fans.

Like many fitness brands, Peloton’s business model relies heavily on social media, with many of the instructors boasting large followings. Oh, and rumoured six-figure earnings. Per week.

Peloton verdict: Fitness Fad or Sound Investment?

Here’s a breakdown of Peloton’s year in numbers:

  • Peloton’s stocks soared 240% in 2020, boosted by the lockdowns and COVID-19 restrictions
  • Their growth is estimated at 115% for Q1 2021
  • Year-on-year quarterly revenue grew by 232.4%
  • Stocks are up 473% from its all-time-lows in March

However, it’s not all hunky-dory for Peloton. With hopes of economic recovery and the continued rollout of vaccine programs, the company has experienced a recent pullback.

Having said that, COVID-19 restrictions are still in place across much of the world, so the stock can and may continue to climb. In other words, as long as we’re working from home, we’ll be working out from home too.

Another consideration is that Peloton product owners have spent quite a lot of money to buy their product. In turn, it’s reasonable to expect that most will continue their subscription post-pandemic.

Then, of course, is the emergence of other major players in the market. Today, big names such as Lululemon and Apple Fitness+ are now Peloton competitors vying for their share too.

Peloton’s strategic deal with Beyoncé definitely didn’t hurt either, in which the pairing delivers custom digital content and pro-social initiatives. 

However, even a multiyear partnership with the queen of R&B doesn’t make Peloton immune to customer dissatisfaction. In particular, Peloton has left many customers angered by delivery delays, with some left waiting a month or more. 

The whole debacle could hold the company back significantly in its continued rise. If you’ll pardon the pun, Peloton will have to ‘work out’ how it will sort its supply chain and make amends if it wants to cement its leading position.

Peloton’s Five Ws

Who

Boutique fitness at home | Subscription product | Upper-class stock | Stay-at-home stock

What

Products & Services: Cardio app | Subscription to live video exercise | Video-enabled (spin) bikes and treads (treadmills) | Accessories

When

2012

The beginning – Peloton was founded as part of Kickstarter campaign

2019 (Sept)

Initial Public Offering (IPO price: $29)

2020 (March)

All time Low ($17.7)

2020 (October)

All time High ($139.75)

2020 (November)

First major test – 20% stock price fall

Where

An American company with subscribers all over the world

Why

Investors get excited by its recurring revenue model. Pelotoners get excited by bringing motivating and inspiring workouts at home.


Disclaimer: Eurotrader doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information provided here, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. We advise any readers of this content to seek their own advice.

Latest resources