What happened
Easy come, easy go. Shares of Peloton Interactive (PTON) were falling 5% at 11:41 a.m. ET on Wednesday after soaring almost 19% yesterday on a deal with Hilton Worldwide Holdings to place fitness equipment in all of its hotels.
While the decline today means the connected fitness equipment maker is still up 12% from Monday's close, Peloton has had a hard time retaining any of the previous rallies in its shares. The stock is down 92% from its 52-week high.
Image source: Peloton Interactive.
So what
Peloton is quickly trying to shore up sales, which plummeted in its fiscal fourth quarter, ended in June, dropping 28% year over year as subscriber growth slows, churn increases, and the number of fitness classes being taken by subscribers plunges.
Last week it announced it would be selling some of its fitness equipment in Dick's Sporting Goods stores as part of its strategy to decentralize responsibility for growing sales. Instead of only buying its stationary bikes, treadmills, and its new rowing machine on its website, customers will be able to shop at Dick's or even on Amazon for certain gear.
Now what
The pandemic lockdown darling has failed to properly navigate the reopened economy and its business looks increasingly like a niche market rather than a fitness trend with legs to grow. Because Peloton's equipment comes with a luxury brand price tag and requires an ongoing subscription to connected workout classes to get the most out of it, an economy in possible recession with rampant inflation, elevated gas prices, and rising interest rates makes its business a tough sell.
