Few companies benefited more from the pandemic than connected fitness phenom Peloton (PTON -0.55%). Gyms and fitness classes were off the menu completely at the start of the pandemic, and restrictions have persisted in most places until recently. Peloton has seen sales of its stationary bikes soar over the past year as consumers with cash to burn turned to the pricey equipment to get their fitness fix.

In Peloton's most recent quarter, the company reported revenue of $1.26 billion, up 141% from the prior-year period. About 80% of revenue came from the sale of equipment, with the rest coming from Peloton's subscription offerings.

While some people will likely stick with home workouts after the pandemic is over, recent research from Jefferies suggests that gyms and fitness classes are making a comeback now that most Americans are at least partially vaccinated. That could spell trouble for Peloton as demand for its products fades.

People in a fitness class.

Image source: Getty Images.

Heading back to the gym

Asking people what they plan to do is a notoriously bad way to predict what people will actually do. One example that repeatedly comes up: Netflix price hikes. Surveys often find that a large percentage of subscribers would cancel the streaming service when faced with a small increase in price. A survey done by The Diffusion group in 2019 found that 16% of Netflix subscribers would either downgrade or cancel if the monthly price were raised by $1.

Those mass cancellations never happen when Netflix raises prices. Some small number of subscribers already on the fence about the service may drop, but certainly nowhere close to a double-digit percentage. People simply don't know what they'll do in the future.

Surveys done last year during the pandemic suggested that the working out from home trend would persist indefinitely. A survey done by TD Ameritrade found that a whopping 59% of Americans said they didn't plan on renewing their gym memberships once the pandemic was over.

Well, the pandemic is mostly over, at least in the United States, and it turns out that people are anxious to get back into gyms and fitness classes. Jefferies has been tracking visits to fitness chains and online searches, and the results suggest that the fitness world is getting back to normal.

Traffic flow into fitness centers in the U.S. was at 83% of January 2020 levels in May, and down just 6% from the same period in 2019, according to Jefferies' data. Online search volume for "gym near me" is at New Year resolution levels, matching an all-time high reached in January 2020. States like Georgia, Florida, and Texas that were quick to remove restrictions are seeing the strongest demand for gym visits.

Meanwhile, far fewer people are searching online for home fitness equipment. Search volume for a selection of home fitness items has been quickly declining since January and is now approaching pre-pandemic levels. Online searches for gym and fitness chains are on the rise, while search activity for digital workout platforms like Peloton is slumping.

The at-home fitness business may see a permanent boost from the pandemic, but it will likely be far smaller than surveys suggested last year. For Peloton, that means that growth is likely to slow dramatically as the pandemic ends, or even reverse.

Shares of Peloton have already been crushed this year, down nearly 30%, but the stock is still extremely expensive. The company expects to produce revenue of $4 billion in fiscal 2021, putting the price-to-sales ratio at 8. That wouldn't be very high for a software company, but Peloton derives most of its revenue from selling fitness equipment. It's also worth noting that Peloton reported a net loss in its most recent quarter despite incredible demand for its products.

Of course, Peloton can certainly succeed as a company in a post-pandemic world. But whether the stock can maintain its ultra-high valuation as people return to gyms and fitness classes is another question entirely.