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Why Peloton Interactive Stock Just Popped

By Rich Smith - Jun 22, 2021 at 10:42AM

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Peloton just went corporate -- and that's a good thing.

What happened

Shares of Peloton Interactive (PTON -2.16%) stock jumped 4.5% through 10 a.m. EDT Tuesday.

The company that became famous for selling stationary exercise bicycles and treadmills during the pandemic, so people could exercise at home, has announced a new initiative for corporate customers. Dubbed "Peloton Corporate Wellness," the new program promises "to bring Peloton content or connected fitness products to businesses and organizations operating in the United States, United Kingdom, Canada, and Germany," with the program expanding to Australia "later this year."  

Woman in red standing behind woman in black on an exercise bike

Image source: Getty Images.

So what

Within the launch countries, says Peloton, "starting today, organizations can offer subsidized access to Peloton Digital and All Access Memberships." So the idea appears to be to sell the program to corporations, and then enlist their support in getting their own employees to sign up.

Why would a company want to do this? For one thing, Peloton is promising "measurable and tangible health and wellness benefits" (i.e., fewer worker sick days and perhaps lower insurance costs). For another, Peloton believes its products are so popular that employers offering subsidized access to them will enjoy improved "employee engagement and retention" (i.e., better work performance and fewer employees quitting, because they won't want to lose their subsidized Peloton access).

Now what

Whether those promises prove out for employers remains to be seen, but already Peloton says it's getting traction with the new offering, saying that companies including Wayfair, Samsung, SAP, Accenture Interactive, and Sky have signed onto the new program.

At the very least, this new program should reduce turnover among Peloton's customers. And by enlisting employers to help with its marketing, Peloton may even see an increase in its customer base.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Accenture and Peloton Interactive. The Motley Fool recommends SAP SE and Wayfair. The Motley Fool has a disclosure policy.

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