Oh, how the mighty have fallen. In this economy, not even multi-billion dollar workout companies are safe. Despite workout startup Peloton being founded in 2012, Peloton reached peak popularity in 2020, after the Covid-19 pandemic forced all non-essential businesses to shut down, including gyms and fitness centers. Users could connect to classes at their convenience, and complete instructor-led workouts on their stationary bikes or treadmills, all from the comfort of their homes.
At its pandemic peak, Peloton was worth roughly $50 billion dollars, with its stock soaring by 440% in 2020. It’s been a bumpy ride for former Peloton CEO, John Foley. In 2021, the company faced a massive product recall, one for their Tread+ treadmill, which had faulty touch screens that fell onto consumers, and another for their bikes, of which 27,000 models received faulty clip-in pedals which resulted in user injury. Stocks fell from a 52-week high of $129 to just $17. A whopping 90% drop from its all-time high.
In February, Cofounder and CEO John Foley stepped down, following Peloton cutting 2,800 jobs. (In other words, 20% of their staff.) Foley, in conjunction with the board of directors, created a succession plan and appointed former Spotify CEO, Barry McCarthy, to head up the ultra-famous workout company. Peloton is also actively recruiting investors for a 15-20% (Hey, Elon, if Twitter doesn’t work out, there’s always Peloton!). A deal like this could bring cash flow, and the change in leadership could re-inspire confidence in consumers.
However, Peloton is still far from out of the woods. Now that the pandemic is kinda sorta dying down, gyms and fitness clubs are back open, and, at least in the United States, we’re not facing imminent shutdowns, fitness fanatics want to workout in person.
They want the experience of going to the gym and working with a personal trainer in person. In addition, their competition replicated the Peloton experience, for a fraction of the cost. (with all of their equipment costing over $1,000, plus a membership that has to be paid monthly to access the classes.) Peloton is no longer growing, and instead faced a $439 million dollar loss, as compared to the $60 million dollar growth the previous year. Unfortunately, the forecast for the next quarter and the close of the fiscal year is no better. Leading some financial experts to believe that Peloton will never bounce back, and certainly won’t make a full recovery. Many investors worry Peloton was “covid stock” aka only ultra-successful as a direct result of the Covid-19 pandemic.
The future of Peloton remains to be seen. Will they find investors and bounce back? Will they file for bankruptcy and restructure? Or will they join ranks with companies like Blockbuster and fade into obsoleteness?