Peloton was a darling during the pandemic, achieving lofty sales numbers as the company’s fitness machines offered a popular lifestyle counterweight to all the Netflix binging and delivery orders.
But now that people are heading back to work, analysts have qualms about ongoing demand for home exercise equipment. And Peloton is paying attention. On Tuesday, it launched Peloton Corporate Wellness, a new segment dedicated to getting its machines into the hands of companies and their employees.
Bike: Great, Shares: Not So Much
Fitness equipment was flying out the doors in 2020, and Peloton’s stock shot up almost 400%. But 2021 has been a different story, with shares sliding 29% on the year. Home exercise has lost its luster as traffic at U.S. gyms has now recouped 83% of January 2020 levels, according to Jefferies analysts.
Enter Peloton’s Corporate Wellness program, which will allow companies to offer their employees subsidized access to Peloton cycles, treadmills, and fitness memberships. It’ll also work with them to outfit office exercise areas, and there’s already an impressive cohort of clients:
- Furniture e-commerce company Wayfair, Samsung, software firm SAP, and UK telecom Sky are among the first to join the new program.
But the corporate pivot doesn’t nullify analyst concerns that Peloton’s $30 billion market cap, against a $4.1 billion projected revenue this year, is overstated. Less than a quarter of Americans exercise enough to meet recommended guidelines, and most corporate customers will only make major equipment purchases once, putting recurring revenues in doubt.
Harsh: “We believe one can argue more of Peloton’s market value has been created by its marketing department than by its engineers or instructors,” wrote BMO Capital Markets analysts, in an investment note. “Recommend the bike, worried about shares.”
New Business Line: In another push to diversity its revenue beyond home equipment, Peloton is developing a digital heart-rate armband that would put it in direct competition with Fitbit, Apple’s Apple Watch and Xiaomi’s Mi Smart Band in the $36 billion global fitness tracker market