What happened
Shares of Peloton Interactive (PTON 4.29%) were surprisingly up 7% today even though the market was down. Investors seemed to be cheering a new ad that went viral. The ad was a playful response to some negative publicity the company received last week.
So what
Peloton knew one of its exercise bikes would be featured in an episode of a new show called And Just Like That, a sequel to the popular series Sex and the City. It didn't know that the script called for a character named Mr. Big to die of a heart attack after using it. Needless to say, it's the kind of negative publicity Peloton doesn't want, especially this close to the holiday shopping season.
Image source: Peloton Interactive.
Peloton management was quick to respond to Mr. Big's scripted death by pointing out the heart attack was caused by an unhealthy lifestyle, not the healthy choice of cardiovascular exercise. But over the weekend, Peloton had a more playful response: Its own ad featuring a very much alive Mr. Big and a voice-over from Hollywood star Ryan Reynolds.
Now what
This isn't Peloton's first rodeo with unwanted press. Shortly after the company went public, people criticized its holiday ad. But in the end, it resulted in free publicity that kick-started its sales right before the start of the pandemic. Perhaps the headlines from And Just Like That and its viral ad response can do the same thing this time.
But a single viral ad isn't all that Peloton needs. The stock has plummeted 75% from its all-time high earlier this year. To retake previous highs, it will need to create lasting shareholder value by selling more of its exercise devises, expanding its subscription membership base, and reining in spending so that it can generate positive cash flow. This weekend's ad won't be able to do all of this heavy lifting. But the company is certainly enjoying its moment back in the spotlight.
