With the great news of progress on two different COVID-19 vaccine candidates, many stocks that have benefited from the work-from-home trend were crushed. Peloton (NASDAQ:PTON) was one of the bigger victims, with its shares down a whopping 20% after Pfizer and BioNTech announced 90% effectiveness on their version earlier this month.

But Peloton is so much more than simply a business that's benefited from people spending more time at home. Here's why investors should buy the vaccine news dip.

Work-from-home misconception

Peloton has been painted with that broad brush because it is clearly benefiting this year from a surge in demand due to COVID-19. For example, before COVID-19, the time from when a customer would order a Peloton bike to when it would be delivered was roughly two weeks. But over this summer it surged to 10 to 12 weeks in some, if not most, markets. Peloton has been selling every bike it can produce.

A woman rides a Peloton bike in her home.

Image source: Peloton Interactive.

But to dismiss Peloton as simply a "work-from-home" story that will unwind once the vaccine arrives would be a misunderstanding. Consider this: Peloton has more than doubled its number of Connected Fitness subscribers -- those who own the company's bike or treadmill and subscribe to the content -- every year for the last six years. Clearly, Peloton had been extraordinarily successful long before COVID-19 came along. So why is that?  

Beloved product and service

Simply put, Peloton is beloved among its subscriber base. It starts with the energetic interactive class content, the engaging user experience, the at-home convenience, and the social element of the Peloton community. Simply put, taking an at-home spin class with a professional instructor while competing with others with music blasting is a great experience for most people, and far superior to riding an ordinary stationary bike at home. The evidence of that is in Peloton's Net Promoter Score (NPS), which was recently measured at 94 among U.S. bike owners. For context, very few companies have an NPS figure above 70, the level considered world class.

The convenience of having the spin class experience right at home makes Peloton subscribers use the bike more often than most gym members typically go to the gym. Last quarter, the average Connected Fitness subscriber did 20.7 Peloton workouts per month across indoor cycling, running, yoga, meditation, boot camp, and a number of other fitness verticals. In contrast, 63% of gym memberships go unused, according to a survey of 5,313 U.S. gym members conducted by Static Brain.

While the Peloton bike has a big headline price tag of $1,895, it can be paid for with 39 monthly payments of $49 at 0% interest. In fact, the majority of customers take advantage of that financing offer. Even with the additional $39 per month for the subscription, that's an attractive value proposition considering the much higher engagement of the average subscriber relative to the typical gym member.

Long runway for growth

In light of the popularity of Peloton even before COVID-19, it's only reasonable to think it will continue to be popular after COVID-19. Certainly, demand growth will ease to some extent if the world returns to normal. But all those attractive aspects of the Peloton product and service that drove so much growth in the years since 2014 will remain and continue to drive growth.

In fact, Peloton is only becoming a better product and service as the company continues to plow money into research and development. For example, Peloton just came out with a new software feature called Sessions, which enables users to take an on-demand class but wait a few minutes for others to join that "session," enabling a live race-like environment despite the class itself being on-demand. These innovations drive engagement, which drives subscriber retention, which makes each subscriber more valuable to Peloton.

Today, Peloton has just 1.3 million Connected Fitness subscribers, but management expects that to roughly double again this fiscal year to over 2.17 million by the end of next June. For context, there are 183 million gym memberships in the four markets Peloton competes in. While not all of them will buy a Peloton bike or treadmill, it suggests there is a huge number of people out there who are willing to pay monthly for access to fitness and would at least consider it.

Considering Peloton's extremely high user engagement metrics and its 94 NPS among U.S. bike owners, it shouldn't be surprising if Peloton continues to grow its subscriber base at a robust pace for a very long time. That's why investors should buy the COVID-19 vaccine dip in Peloton before it's too late. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.