A New CEO Cannot Save Peloton

By Douglas A. McIntyre Published Nov 1, 6:45AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

A New CEO Cannot Save Peloton — © gilaxia / Getty Images

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

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.