Peloton Really Had an Awful Year

By Douglas A. McIntyre Published Dec 19, 12:55PM EST

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Peloton Really Had an Awful Year — © Scott Heins / Getty Images

High-end exercise company Peloton Interactive Inc. (NASDAQ: PTON) started to lose its way as people returned to gyms after the worst of the COVID-19 pandemic. People were willing to pay well for equipment when they exercised from the safety of their homes. Then some customers were injured using its machines. In the meantime, it started to lose money. And it has never come close to recovering. (See the most popular exercise fad every year since 1956.)

The hurdles show up in its stock price, which is down 24% this year, compared to a jump of 22% in the S&P 500. To make matters worse, the price is unlikely to recover. Peloton has made several efforts to improve its fortunes, but none have worked.

Peloton’s most recent quarter shows how deep its trouble is. Its revenue of $596 million was down and 7% from the previous quarter and 3% year over year. Worse, the bottom line was brutal. Peloton lost $159 million. A year ago, it lost $409 million. In the previous quarter, it lost $241 million.

Peloton has broadened the distribution of its equipment to Dick’s Sporting Goods and Amazon. The problem with this is that customers get to see its bikes and treadmills next to the competition. And some of the competition is much less expensive. The section on Amazon that sells Pelotons also offers several other brands, including well-known ones Schwinn and NordicTrack.

Peloton also started to sell used versions of its equipment, which runs the risk of cannibalizing sales of its new equipment. The company also allows people to rent its products. And it offers discounts on new products that run as high as 20%. Taken together, these are not the practices of a successful company.

The shareholder letter attached to the most recent quarterly financial report has a comment from Barry McCarthy, Peloton’s CEO and president: “The bad news is we were less successful at engaging and retaining free users and converting them to paying memberships than we expected.” He has not explained why that will change.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.