(BFM Bourse) – Peloton intends to get back in the saddle with an unprecedented partnership with the e-commerce giant Amazon to sell its products. The New York company specializing in connected bicycles has stalled since the reopening of sports halls and is posting significant losses. On Wall Street, the title has sold nearly 90% of its value over one year.
Peloton does not intend to be left behind. The manufacturer of connected exercise bikes, a stock market star in favor of the confinements of the year 2020, must reinvent itself to avoid being caught by the broom wagon. In great difficulty for several months, the group recently announced colossal losses at the end of its fourth quarter of its staggered 2022 financial year (ended at the end of June) which peak at 1.24 billion dollars. Peloton justifies this slippage in the accounts by the actions undertaken to limit excessive stocks, contain high fixed costs and reduce its supply problems.
Getting back into the circuit, 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 locked its distribution circuit. Its equipment was until now exclusively sold in Peloton stores and on the company’s website. It will thus offer some of its products on the platform of the e-commerce giant, including “Bike”, its entry-level exercise bike, sold on its site for the tidy sum of 1,445 dollars. The purpose of this almost vital partnership for Peloton: to expand its customer base which has deserted 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 dollars. In addition to the acquisition of the machine, customers must subscribe to a monthly subscription. Faced with the strong restrictions on the possibilities of outdoor sports and a fortiori indoors, consumers have indeed turned to Peloton’s training devices, in particular its exercise bikes but also its treadmills. The company was indeed 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, the rating of Peloton Interactive 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 leading products and drive business performance and shareholder value creation,” it said. pointed to activist fund Blackwells earlier this year. “It is clear that the company, the managers and the board of directors have wasted this opportunity” lamented its director of investments, Jason Aintabi.
Last month, Barry McCarthy, the new boss of Peloton announced the layoff of 800 employees to drastically cut costs at a company which did not anticipate the return of its customers to the gyms with the lifting of health restrictions. . Among the other levers identified to relaunch the machine, Peloton has chosen to outsource its production of connected bicycles and treadmills and to lower the price of its equipment to capture a wider clientele.
If the action accelerated the pace on the day of the announcement of the partnership with Amazon with a rise of 20% on the 13 dollars, the recovery of the title is not sufficient enough to make up for the enormous delay shown by the title. The stock is now trading three times below its IPO price set at $27 in September 2019. Over one year, the performance is far from stellar with a drop of more than 90%…. And the rest of the course risks being strewn with pitfalls for the specialist in connected bicycles. For the current quarter, the company expects stable subscriber numbers and revenue of between $625 million and $650 million. A roadmap that does not convince. And for the 2023 financial year, Peloton simply did not deliver any quantified outlook…
Sabrina Sadgui – ©2022 BFM Bourse