Peloton faces a steep rise despite marking 91% less last year.
According to Morningstar data, Peloton has had a “wild ride” in recent years, with its share price rising at the start of the pandemic and then falling 91% in the subsequent 12 months.
Despite the decline, some observers think the business is still a major force in the fitness industry.
According to Mark Dunley-Owen, portfolio manager of the Orbis Global Balanced fund, Peloton had less than 600,000 paying users before the Covid-19 outbreak, plus friends and relatives, performing 150,000 workouts daily.
He said that the company’s engagement and satisfaction metrics “are the envy of other organizations” as of right now, when it has roughly four million paying customers and 1.5 million workouts every day.
He said, “This is partly due to Peloton’s community culture, and partly due to its enormous fitness content library. Peloton has unique access to the lucrative fitness community thanks to engaged users and expanding content, which is significant not just to Peloton but also to companies like Nike or Amazon who have been rumored to be interested in buying the company.
While agreeing that Peloton “does not have a significant unique selling point on a hardware basis,” Neil Campling, head of TMT research at Mirabaud Equity Research, added that the company’s strong community and online classes effectively “brought fitness into the digital era” in a way that is challenging to imitate.
The Peloton model, which has 55 instructors to serve four million members, should be incredibly profitable, but Dunley-Owen claimed that this is not the case.
Despite making more than $3 billion in annual revenue, he said, “it loses a lot of money. In the quarter ending in June, it had negative cashflow of $412 million.”
Despite making more than $3 billion in annual revenue, he said, “it loses a lot of money. In the quarter ending in June, it had negative cashflow of $412 million.”
The company’s quarterly numbers from last month were another potential death knell for it as negative news keeps coming in.
Analysts, however, applauded the move to Amazon as a simple method to quickly dump some of the inventory it has been struggling to sell.
