After soaring 434% in 2020, Peloton (PTON -2.48%) stock has taken a breather this year, shedding 44% of its value so far. With people stuck at home and looking for ways to work out, the pandemic gave the business a nice boost, but things seem to be slowing down. Revenue growth of 54% in the fourth quarter was a dramatic deceleration from the previous four quarters. 

As we continue making progress putting the pandemic in our rearview mirror, this consumer-discretionary stock faces numerous challenges, primarily from the additional choices exercise junkies have today including traditional brick-and-mortar gyms. 

Investors need to pay attention to this crucial information.

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Image source: Getty Images.

Working out at home and in person 

Similar to how corporations are planning for a hybrid model with work schedules split between the office and home, the future of fitness is on that same path. In a February survey, Mindbody, a service provider to the health and fitness industry, revealed that 65% of respondents plan to work out both at home and in-person (at the gym or studio) in a post-pandemic world. Peloton shareholders must focus on this critical statistic going forward.

I think there are two key takeaways from this data. First, investors' worries about a reopening economy resulting in everyone flocking back to fitness studios are overblown. Primarily because of its convenience, at-home fitness is here to stay. The pandemic altered much of our lives and accelerated consumer shifts already happening, and working out at home was one of them. Now that people are familiar with and have benefited from being able to exercise from the comfort of their homes, this behavior will stick. This will give Peloton shareholders something to cheer about. 

But on the other hand, people will also resume going back to gyms to round out their workout regimens. Just look at Planet Fitness' (PLNT 0.24%) latest quarterly numbers for proof. On Aug. 9, the operator of low-cost gyms reported its best sales number since the health crisis started, increasing revenue 241% during the second quarter. And management pointed out that the company registered six straight months of net membership growth through the first half of 2021. "Our membership momentum continues to defy our historical seasonal patterns, and, as of the end of July we had more than 15 million members," CEO Chris Rondeau said. 

Peloton must be able to navigate shifts in consumer behavior if it is to continue its remarkable success. 

An increasingly crowded space 

As if the return of traditional brick-and-mortar gyms wasn't enough of a damper, Peloton must also deal with a wildly competitive at-home fitness market. Companies like Hydrow, Tonal, and Lululemon's Mirror provide consumers with an array of high-end, tech-enabled equipment to choose from. And the most valuable business in the world, Apple (AAPL 1.66%), has an improved and compelling Fitness+ offering with 11 different workout types and a strengthening integration with the Apple Watch. 

The iPhone maker's service, at $9.99 per month, competes directly with Peloton's more expensive ($12.99) digital-only service. While it's unlikely Apple will manufacture its own equipment to sell, the fact that it's making an effort to attract more subscribers (those not necessarily interested in high-priced machinery) is a negative for Peloton. 

And Peloton recently reduced the price of its flagship product, the Bike, by $400. While management insists that this is a strategic move to expand the company's addressable market, the timing doesn't look good. In addition to the previously mentioned growing competition, Peloton is handling safety problems with its treadmill products, an accounting issue, and slowing sales gains. Consumer electronics generally do see their prices decrease over time, so maybe that's the case here with Peloton. Unit sales growth decelerated in Q4 for the first time since Peloton has been a public company, but management has confidence thanks to a massive order backlog and greater manufacturing capacity. Investors will want to pay attention to unit volume in the quarters ahead.

It's becoming clear that the future of fitness is going to be hybrid, with people choosing to get a sweat in at home and at their local gyms. And Peloton, which was once the only horse in the at-home exercise race, is now facing some question marks in its short history as a public company. Shareholders will want to keep a close eye on this stock.