Peloton Interactive Inc. (PTON) stock plunged -9.03% to the price of $105.72 for the current trading session, at the time of writing. PTON’s previous session closed at $116.21.
Peloton Interactive Inc. is a fitness-based company that provides fitness products internationally, founded in 2012 and is headquartered in New York. The product offerings include the Peloton Bike and the Peloton Treadmill. These Peloton products come with customization and variations which include the addition of touchscreens; you can customize it to get on-demand fitness classes and live streams. Peloton has had 3.6 million active members as on 9th December 2020. The company also provides the Peloton Digital App which is included in the subscription-based model of the company. This model includes the app for providing access to fitness classes as well as other on-demand classes for multiple household users.
Peloton is gauging performance in the home fitness market
Since the pandemic has closed the doors to gyms, fitness centers, and open parks due to fear of spreading the virus, people have become tired of sitting at home and not able to perform their favorite fitness routines. This is where Peloton stepped in by marketing its Treadmill and Bike to perform exercises in the comfort of their home. The company has been seeing a boom in the demand for its Bike and Treadmill ever since the pandemic started.
Furthermore, there is also a hype on digital markets of every sector and industry, which is also true for the fitness industry, as people sit at home during the pandemic and look forward to new innovative ways of performing exercises through the online platform of fitness services and subscription. This has also lead to Peloton’s subscription-based model to perform well as the demand has risen.
This can be seen through the metrics of fitness subscription number which have increased by a three digit percentage of 134% to the number of 1.67 million subscribers in the second quarter of the fiscal year 2021. Furthermore, it also expanded its manufacturing operations by acquiring Precor- a fitness equipment provider last December, this allowed the company to expand its business and incorporate the b2b market.
Peloton controversy and the overall outlook of PTON for 2021
There seems to be no stopping the company to enter the home fitness market and expand. This will increment the performance of the PTON stock and the growth of its share value. However recently there is one issue that has come to the surface that seems to have disrupted the stark positive image of the company’s performance and products.
The U.S Consumer Product Safety Commission posted a tweet on Saturday stating that it has found multiple incidents and cases where small children and pets are injured by being pulled, pinned and dragged underneath the Peloton Tread+ (Peloton’s treadmills) through its rear rollers. The Safety Commission further advised in the tweet for everyone to stop using the treadmill. However the CEO of PTON stock, John Foley responded defending the treadmill’s safety and instructions of usage/warnings while at the same time accusing the CPSC’s tweet a personal attack.
The shares slumped on Monday due to this however, this issue is being tackled and addressed by the company, and analyst perceive this not to be a long-term issue for the sales and PTON stock performance.