'The exercise bike maker is worth less than a fifth of its $50 billion valuation during the global lockdown #Peloton #fortunesrace #downhillfitness #fansreturn #gyms If Peloton is wondering why the lockdown craze in at-home workouts isn\'t sustainable, Ian Rodriguez has a great answer: It\'s more fun to work out with other people. Rodriguez, a 52-year-old teacher from Preston, Lancashire, cancelled his gym membership when the pandemic hit, but can\'t wait to return. Like many others, he spends money on fitness equipment, including a rowing machine and some weights. But then he started missing gym class. Ian Rodriguez, 52, a teacher and writer from Preston, Lancashire “I kept fit at home throughout the lockdown, but as restrictions eased, the lack of social interaction started to get to me. I was getting to the stage where I missed going to classes at the gym. Exercising on your own, even with someone shouting at you on a screen during an online course, just isn’t the same,” he says. Rodriguez is now back at the gym “four or five times a week”. Millions of others around the world have responded to the call of the gym instructor, leaving Peloton, the home fitness company, facing further questions about what this means for demand for its exercise bikes, treadmills and online classes when it reports its latest quarterly results on Tuesday. The last few years have been a wild ride for the company. Peloton was one of the symbolic commercial successes of the global pandemic lockdown, along with the likes of Zoom, Netflix and Amazon. It floated in 2019 at $29 per share and its valuation approached $50bn in January 2021 as shares went over $160 at the height of lockdown restrictions. But Peloton’s fortunes have turned, and the valuation has sped downhill dramatically. Today, the company is worth as much as it was around flotation, at $8bn. Late on Friday, however, shares in Peloton surged more than 30% in after-hours trading after a report in the Wall Street Journal that Amazon is considering making a bid for the company. A takeover bid from one of the world’s biggest businesses would be in keeping with a high-profile brand that is used to making headlines. In May last year, Peloton recalled its two treadmills following the death of a child and dozens of other injuries, and in late 2019 it was lambasted for a “sexist and dystopian” Christmas advert, which featured a woman recording a video diary of her Peloton use after her partner gave her a bike. In December, its shares tumbled following the onscreen death of the Sex and the City character Mr Big while riding a Peloton in the series reboot, And Just Like That. A rushed-out parody ad campaign by Peloton featuring the Mr Big actor, Chris Noth, was subsequently dropped when Noth was accused of sexual assault. Noth denies the accusations. Chris Noth as Mr Big in Sex and the City 2 Photograph: HBO/YouTube Now, the chief executive, John Foley, is facing pressure from at least one shareholder to resign. Blackwells Capital, an activist investor with a 5% stake in Peloton, says it has “grave concerns” about performance and is calling on its board to fire Foley and explore a sale. Anjali Lai, a senior analyst at the research company Forrester, says Peloton is wrangling over a question that has affected all companies selling goods and services to consumers: how permanent are the changes brought about by the pandemic? “Are the dramatic changes in consumer behaviour that we’ve observed over the last two years a pulling forward of consumer demand, or are they indicative of a long-term, persistent change in what consumers buy, and how? In Peloton’s case, supply and demand has been volatile, which indicates that the at-home fitness experience is an acceleration of consumer demand, not necessarily a persistent change.” Peloton makes and sells exercise bikes (starting at £1,550) and treadmills (starting at £2,545), as well as a monthly subscription fee to its online classes at £12.99 a month. It also makes clothing and accessories, although this is a much smaller part of the business, and recently launched a camera product. As a rough proxy of how many people use its equipment, the company has 2.5m connected fitness subscriptions, in which users pay £39 a month to access classes through their Peloton bike or treadmill. Peloton does not give a geographic breakdown of sales, but it currently ships equipment to the US – its biggest market – plus Canada, the UK and Germany. In its last set of quarterly results in November, it said sales this year will be up to $1bn lower than expected, at $4.4bn-$4.8bn, while the number of monthly workouts by each connected fitness subscriber had fallen to 16, versus 20 for the same period in 2020. It recorded a loss of $376m in the three months to September last year, against net income – a US measure of profit – of $69.3m the year before, as it cut the price of its bikes, ramped up ad spending and suffered problems with its supply chain.'
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