{"id":468,"date":"2022-03-02T15:19:13","date_gmt":"2022-03-02T15:19:13","guid":{"rendered":"https:\/\/scienceandnerds.com\/2022\/03\/02\/what-on-earth-is-going-on-with-peloton\/"},"modified":"2022-03-02T15:19:13","modified_gmt":"2022-03-02T15:19:13","slug":"what-on-earth-is-going-on-with-peloton","status":"publish","type":"post","link":"https:\/\/scienceandnerds.com\/2022\/03\/02\/what-on-earth-is-going-on-with-peloton\/","title":{"rendered":"What on Earth is going on with Peloton?"},"content":{"rendered":"

Source: https:\/\/www.theverge.com\/2022\/2\/8\/22923434\/peloton-foley-ceo-layoffs-earnings-connected-fitness<\/a>
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Things are a lot less rosy for Peloton these days. Once a pandemic darling, the connected fitness company has seen its stock price plunge in recent months. TV shows have turned its bike into a deadly<\/a> punchline<\/a>, and there\u2019s been no shortage of rumors speculating which company should buy Peloton<\/a> to save it from impending doom.<\/p>\n

Then today, Peloton kicked off its Q2 earnings call with a flurry of news<\/a>: the company has a new CEO. It\u2019s eliminating 2,800 jobs globally, scaling back marketing, and putting the kibosh on its North American manufacturing ambitions. Altogether, it\u2019s a grim picture that raises questions about whether Peloton can find a way out of this mess.<\/p>\n

As a fitness tech reviewer, Peloton\u2019s business woes are bewildering because the company has an excellent product. Its hardware, while pricey, is aesthetically pleasing and generally well constructed. The classes are engaging, and the instructors have their own devoted followings (especially Cody Rigsby<\/a>). Peloton users are often referred to as a cult, to the point where the Tread Plus recall wasn\u2019t enough to persuade some owners<\/a> to return the product. While Peloton\u2019s financial news has been doom and gloom as of late, CFO Jill Woodworth was quick to point out that engagement remains high with an impressively low monthly churn rate of 0.79 percent for Q2. <\/p>\n

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Peloton\u2019s classes aren\u2019t the problem.<\/em><\/figcaption>Photo by Amelia Holowaty Krales \/ The Verge<\/cite><\/p>\n

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So how did Peloton, a company with a stellar product and devoted fan base in a rising connected fitness market, end up like this? The short story is Peloton overextended itself and failed to foresee weaker demand once gyms re-opened.<\/p>\n

In 2020, Peloton\u2019s supply chain was struggling to keep up with the unexpected surge in demand created by people suddenly eager to work out at home. Facing months-long fulfillment delays<\/a>, Peloton decided to heavily invest in building out its manufacturing capabilities. It dropped millions to expedite shipping<\/a> and another $420 million buying Precor<\/a>, one of the world\u2019s largest commercial fitness equipment makers. It spent another $400 million on a factory in Ohio<\/a>. The company was positioning itself to rapidly build bikes and treadmills for a market that couldn\u2019t get enough.<\/p>\n

Then in 2021, Peloton\u2019s success story began crumbling. Both its treadmills were publicly recalled after reports of several injured children, with one case resulting in death. Response to its forthcoming Peloton Guide<\/a> strength training system was tepid. And demand for its products has slumped as some people headed back to gyms once quarantine restrictions lifted. The result has been Peloton\u2019s market cap plummeting from a pandemic peak of around $50 billion to around $8 billion last week after it was rumored the company would halt production<\/a> on all its products. That whole commercial debacle<\/a> with Sex and the City <\/em>actor <\/em>Christopher Noth probably didn\u2019t help.<\/p>\n

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