What happened
Shares of Peloton Interactive (PTON -0.98%) were falling 4% in morning trading Wednesday after an analyst at Wedbush downgraded the home fitness stock to neutral from outperform.
So what
Peloton was a big winner after gyms were forced to close during the pandemic. Even as the COVID-19 outbreak looked to be fading, Wall Street was still pretty upbeat about the home fitness equipment maker's growth potential as it surmised it would keep many of the customers it won even after gyms began reopening.
Image source: Peloton Interactive.
Wedbush, however, thinks there may be too much competition now for Peloton to keep up the pace. In a note to investors, Wedbush analyst James Hardiman wrote consumers now have an "unprecedented and ever-growing list" of workout options. He argues Peloton is going to need to introduce innovative new products and initiate some savvy marketing if it expects consumers to choose it over the competition.
Now what
Peloton Interactive basically offers customers a stationary exercise bike and a treadmill, in a better-best tier. People can also sign up for workout classes separate from buying one of its expensive pieces of equipment.
There had been talk at one time of introducing a rowing machine, but that might not be enough to bring in more customers. Given the recent bad publicity it got over forcing its customers to sign up for its monthly exercise courses at $40 a month or face having their equipment "bricked," consumers may decide their local gym is the best bet.
