Investing

A New CEO Cannot Save Peloton

Douglas A. McIntyre

Published: November 1, 2024 6:45 am

24/7 Wall St. Insights

• Peloton Interactive Inc. (NASDAQ: PTON) shares surged after it named a new CEO.
• However, the fitness equipment company still has a host of problems it cannot overcome.
• Also: Dividend legends to hold forever.

Figures for Peloton Interactive Inc.’s (NASDAQ: PTON) most recently reported quarter were alarmingly poor, like results from previous periods. The company added a new CEO with good credentials, which helped the stock rise 28%. Even with the run-up, the stock was off by 9% in the past two years, while the S&P 500 is 73% higher.

While revenue dropped again by 2% to $586 million, there was one ray of light. The $1 million loss for the quarter compared to a $159 million loss in the same quarter the year before. However, extreme cost cuts are what helped. They went from $417 million to $291 million. Peloton cannot cut its way to success.

Instead of closing all its businesses, Peloton added Peter Stern as its chief executive. He has had mid-level jobs at Ford and Apple. Ford’s management is horrible, so his tenure there does not speak well of him.

Peloton cannot overcome its biggest problem: consumers do not want its products and services. It still sells its products on Amazon, meaning the huge e-commerce company keeps a percentage of its revenue.

The most significant challenge Peloton has is the large number of competitors, almost all with lower price points. These include Schwinn, Stages, BowFlex, Keiser, Wahoo, and Rogue products. And that is not a complete list. The company cannot overcome these problems.

Peloton does not have viable products, and its services business is stagnant.

Buy, Sell, or Hold: Planet Fitness, Peloton, Xponential Fitness, or Life Time