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Why Peloton Interactive Is Tumbling While the Market Is Soaring

By Rich Duprey – Updated Sep 22, 2021 at 5:03PM

Key Points

  • Peloton Interactive still needs to prove it can compete against lower-cost rivals.
  • High-priced equipment may appeal more to a commercial clientele in the long run.
  • The fitness guru still has quirks and glitches in its equipment.

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The fitness equipment leader has been running in the wrong direction all year.

What happened

Shares of Peloton Interactive (PTON -2.86%) were falling 6% in midday trading Wednesday on no specific news related to the connected fitness equipment maker, but following a weeks-long slide in its stock.

Peloton stock is now down 45% from its 52-week high and off more than 33% year to date.

Man on a connected fitness bike

Image source: Peloton Interactive.

So what

Doubts persist about the ability of Peloton to continue growing in a post-pandemic world. While it crushed sales estimates in 2020 as people forced to stay at home turned to its connected fitness equipment to stay in shape, with gyms reopening and new competitors offering similar but more affordable equipment, the markets have worried over how long it can keep going higher.

Peloton also had to deal with two recalls of its equipment, and yesterday it acknowledged a glitch with its connected displays:

The fitness guru, though, has sought to expand its addressable market by pursuing corporate fitness accounts through its acquisition of Precor, a fitness equipment maker focused on the hospitality market. The purchase could provide a way to get Peloton equipment into hotels.

Now what

Peloton reported last month that monthly workouts by its subscribers plunged 23% in the fiscal fourth quarter to 134.3 million, indicating the struggle the equipment maker faces against robust competition and even the great outdoors.

Running on an upscale treadmill in your living room just might not compete with a jog along a path in the woods or a park.



Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Peloton Interactive. The Motley Fool has a disclosure policy.

Stocks Mentioned

Peloton Interactive Stock Quote
Peloton Interactive
PTON
$12.92 (-2.86%) $0.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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