Peloton's Growth Is Slowing, Cuts Prices

Sebastien Callebaut -

The Fitness Disruptor Is Cutting Prices

The fitness bike maker is expected to cut the price of its flagship bike as people head back to their local gyms and do less exercise at home. The company is also starting to shift its business mix back towards treadmill sales, which are less profitable than cycles.

Treadmill Recall

Total revenue grew by 54% to $ 939.9m from $ 607.1m a year earlier. However, the pace of growth slowed from the third quarter, when sales more than doubled year-over-year and topped the $ 1B mark.

Growth was hurt by the treadmill recall and the temporarily halt of sales. Its less-expensive treadmill is expected to go back on sales next week. Another factor hurting growth is increasing competition from Hydrow, Tonal and Mirror (owned by Lululemon) On top of this, as restrictions ease, more and more customers head back to their local gyms.

"Average monthly workouts per connected fitness subscriber, meantime, fell to 19.9 from 24.7 a year earlier. The company said the decrease was expected due to seasonal trends, such as more people vacationing during the summer months or spending extra time outdoors." by Lauren Thomas for CNBC

BENCHMARK’S TAKE

  • Easing restrictions are pushing consumers out of their homes and back to their local shops and gyms
  • The summer months are also having a negative impact on home-based businesses as consumers spend more time away
  • At a trailing P/E of 170, Peloton is still richly priced. We're staying on the sidelines for now and do not chase the post-earnings dip

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Beeline Navigation on Unsplash.