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Finding Success During the Crisis: Peloton Keeps Pedalling

Erik Totten
3 min read
May 22, 2020

Remember Peloton? In what seems like a lifetime ago, in November, the connected exercise bike company was the laughingstock of the internet after airing its “Peloton wife” commercial. Now, it looks like they are the ones laughing as the company has seen a 66% surge in sales during their third quarter. So far, in 2020, only 10 stocks in the US have performed better than Peloton, which is up 51%.

It’s no secret that many businesses have been devastated by the disruption caused by COVID-19. However, many other companies offering products that are more conducive to staying at home have soared over the last few months. Similar to PepsiCo and Nintendo (which I wrote about earlier this week), Peloton has also benefited from people being at home more.

Peloton was found in 2012 by John Foley. They sell $2000 stationary exercise bikes and treadmills that are connected to the internet. This allows members to subscribe and sign up for spin classes that they can attend from the comfort of their own home, anytime. To make the pricey bikes easier to afford, they also offer an interest-free payment plan.

On March 15, Peloton closed its studios and discontinued in-person classes. Then, on March 19, the company suspended some of its delivery, in-home repair, and pick-up services. Currently, the company has its instructors conduct live classes from home.

They now have 2.5 million members. At the end of March, when most gyms were still closed, Peloton riders participated in 1 million classes in a single day, a first for the company. Later, in April, the company broke its previous record for most participants in a live class with 23,000 people attending. The company also reported an impressive year-over-year increase in subscription revenue (92%) and in the number of subscribers (94%).

Despite all of these sales happening when their brick-and-mortar locations are closed, Foley thinks Peloton’s retail locations still have a lot to offer. 

“This is a contrarian view. I am more excited about our retail stores than I was 90 days ago. We are selling tons of Peloton products today without our stores being open” Foley told Time Magazine. “So a lot of investors are saying ‘Hey, we don’t need our stores.’ I’m thinking the opposite. I am really excited about the opportunity that is going to present itself with some retailers struggling and Peloton being able to pick up more premium retail locations. We’re going to be investing and making those special locations.” 

At least one analyst agrees with Foley and expects Peloton to continue to perform well after the pandemic-related restrictions are eased.

“We believe the pandemic has accelerated underlying offline to online trends in the fitness industry as people were forced to adapt to a new environment,” Youssef Squali, an analyst at SunTrust Robinson Humphrey, wrote. “The speed and magnitude of this trend were seen in Peloton’s earnings report.”

While many businesses around the world have taken extreme hits to their bottom line, some are proving more resilient. Consumer buying patterns are adapting to the new state of the world, and some businesses are benefiting from those changes. This is the last part in a series I’ve written this week covering businesses that are performing well during the COVID-19 pandemic.