(BFM Bourse) – Peloton intends to get back in the saddle with an unprecedented partnership with e-commerce giant Amazon to sell its products. The New York company specializing in connected bicycles has stopped since the reopening of the sports halls and is recording significant losses. On Wall Street, the security sold nearly 90% of its value in one year.
Peloton does not intend to be left behind. The maker of connected exercise bikes, star of the stock market in favor of the confinements of the year 2020, must reinvent itself so as not to be caught by the broom wagon. In great difficulty for several months, the group recently announced colossal losses at the end of the fourth quarter of the 2022 financial year (end of June), peaking at $1.24 billion. Peloton justifies this slippage in the accounts by the actions taken to limit excess inventories, contain high fixed costs and reduce its supply problems.
Back in the loop, Peloton recently announced a partnership with Amazon to sell some of its products on the e-commerce site. A great revolution for a company that has locked down its distribution circuit. Their equipment was until then sold exclusively in Peloton stores and on the company’s website. So it will offer some of its products on the e-commerce giant’s platform, including “Bike,” its entry-level exercise bike, which sells on its website for the sum of $1,445. The objective of this partnership is almost vital for Peloton: to expand its customer base that has abandoned its ranks since the reopening of the sports halls.
A ‘wasted opportunity’
Founded in 2012, Peloton saw its sales increase significantly during the first year of the Covid-19 pandemic, despite prices ranging between $2,000 and $4,500. In addition to purchasing the machine, customers must subscribe to a monthly subscription. Faced with severe restrictions on the possibilities of outdoor and, a fortiori, indoor sports, consumers have really turned to Peloton’s training devices, in particular its stationary bikes, but also its treadmills. The company was in fact one of the main winners of the pandemic on the stock market: between the low point of the markets in March 2020 and the beginning of 2021, Peloton Interactive’s rating rose by more than 860% on the American Nasdaq.
“We believe the pandemic has presented Peloton with a tremendous and unexpected opportunity to accelerate consumer adoption of its core products and drive business performance and shareholder value creation,” activist fund Blackwells said earlier this year. “It is clear that the company, the managers and the board of directors missed this opportunity,” lamented its chief investment officer, Jason Aintabi.
Last month, Barry McCarthy, the new head of Peloton, announced the layoff of 800 employees to cut costs drastically at a company that did not anticipate returning its customers to gyms with the lifting of health restrictions. Among the other levers identified to relaunch the machine, Peloton chose to outsource its production of connected bikes and treadmills and lower the price of its equipment to win a wider clientele.
If the action picked up the pace on the day of the announcement of the partnership with Amazon with a rise of 20% over the 13 dollars, the title’s recovery is not enough to make up for the huge delay shown by the title. The stock is now trading three times below its IPO price set at $27 in September 2019. Over the course of a year, performance is far from stellar, with a drop of more than 90%. pitfalls for the connected bike specialist. For the current quarter, the company expects stable subscriber numbers and revenue of between $625 million and $650 million. A script that does not convince. And for fiscal 2023, Peloton simply did not present any quantified outlook…
Sabrina Sadgui – ©2022 BFM Bourse