The impact to Apple as a company of the downturn in consuming spending is close in inconsequential.
For Peloton, it is huge, including questions of sustainability (as you point out), particularly given how tough of a position they are already in.
Yes! To put this in perspective, Peloton’s customer retention rate has been about 3x that of TrainerRoad.
Yes, the financial issues are their #1 challenge. And it’s not clear whether it will be banks that keep them afloat in the interim or a buyer.
The rowers are probably “making money” from a variable margin perspective. But it’s probably too small to meaningfully offset the company’s overall financial challenges yet.
As for Concept 2, to me it seems to be a similar situation to when the Peloton bike entered the market - premium experience for a premium price. Some will certainly pay for that. I think the larger product/market question for Peloton is whether they can go after the middle market without canabalizing their premium market.
Not as of their latest earnings, they aren’t. Well, maybe they are - I think there’s actually either an error or a rounding error here. If they are losing, it’s a fraction of a percent, if they arne’t, it’s a fraction of a percent gain. Check out this chart. It actually doesn’t make sense. Peloton measures subs in both ‘Connected Fitness’ (meaning they bought Peloton hardware), and the App Subscription (like on an iPad or whatever). In both of those categories, as well as net additions, they went up. Yet somehow, the total went down.
In thinking about it, I think where it’s messy is that paying subscriptions went up (barely), but some non-paying family members canceled/deleted their accounts. For example, friends and family that have stayed at our house have created an account (for free) to use our Peloton Bike/Tread, yet, don’t pay otherwise. So at some point some of them deleted their accounts.
Either way, they’re not losing paying members, which is more or less all that matters in the context of are they losing paying people. They (net) gained a handful.
Funny. I was basing my comments on the same chart.
So – maybe I mis-read it. I see a slight decline in net membership. A slight up-tick in subscriptions ending. And app subscriptions ending. Churn is up slightly as well.
I’m also factoring in ample reporting suggesting that the market for bikes has gotten very, very soft. To the point that Peloton is considering adding a CPO or similar offering (per a recent NYT article).
Net adds is essentially zero when comparing Q4 to Q3. So, yes, they are not losing the # of paying customers. To understand whether there is a churn issue, one would need to know the # of new paying customers (i.e. equivalent number of leaving customers) and how that compares to the prior quarter (and prior year).
At a higher level, Peloton’s business (as all indoor fitness businesses) is highly seasonable. So generally the relevant comparison would Q4’21 to Q4’22 where their business is up 27% despite the ending of the pandemic, tough economic times, etc (i.e. under normal times considered great). However, this data gets substantially overshadowed by Peloton’s enormous cash issues related to their cost structure.
PTON isn’t exactly a bell weather stock. PTON is among the class of low quality IPO’s that flooded the market, and is now trading as such. Maybe they can get it together in the future, turn a profit and be valued at a normal P/E ratio. Time will tell.
Business expansion through the hospitality industry (i.e. hotels) and fitness centers has been part of their business plan for several years. The pandemic shut that down for the most part. With the consumer travel industry exploding (not so much business travel), that opportunity has been revived. Amazon, Dick’s Sporting Goods, Hilton, UHC are recent major successful examples of that.
I don’t know the financials behind the deals, but easy to imagine that there is little margin on the hardware and modest margin on the monthly subscriptions (volume-based). However, there are multiple benefits to Peloton including incremental margin dollars and brand visibility (i.e. secondary effect should be growth in consumer sales).
PTON, like many other stupid companies with a grandiose vision fueled by IPO money and the pandemic tailwind still needs to right size their staff and expenses.
With billions of IPO money in the bank, they thought they were going to become the fitness kings of the world but there is a limited appeal to $3000 bikes and $5000 treadmills that kill children. They have lowered prices on the equipment but IMO there is still limited appeal to a $1500 bike and a $40/month subscription. It’s a wealthy persons expense. During the pandemic, people were more willing to buy anything while stuck at home. Plus, they had extra money in their pockets.
Now, PTON has to be a real company and right size expenses with revenues and then try to grow revenues where they can with new or competitive offerings. Being a real company is much harder than being a post IPO pandemic darling. Plus now they have recession headwinds and currency devaluations outside of the US to contend with.
You can’t. But the economic downturn has not been kind to most of the consumer tech sector. If the assertion of Peloton customers flocking to Echelon (mentioned above by another TR user) or anothe competitor is correct, then you would news headlines, such as: “Amidst economic downturn, Echelon flourishes as Peloton users flock to it”. LoL.
I jumped in twice early after they went public - first based on my own knowledge (including my wife being an avid user since Feb 2017) and second time after reading a number of posts in this thread early on with my thought process being: “If TR users have this little understanding of Peloton’s value proposition, imagine what the general market understanding is”. Of course, both turned out to be good bets.
However, at this stage, Peloton’s value proposition is well understood by the market so the bet would be sort of like betting on Apple in the early 90s when it was in the toilet and Jobs was just returning to the company. Bottom line: The price seems attractive, but I don’t have insight as to whether they can overcome their financial/cost structure challenges to make that bet.
The potentially bigger issue is the drop in Total Platform Workouts / Average Monthly Workouts per Connected Fitness Subscription / Average Net Monthly Connected Fitness Churn: all 3 are trending in a very negative direction. If these 3 all continue to trend negative, then that says that the Peloton user base is losing interest, and I would expect to see paying members start to decline in a quarter or two.
Perspective, I found what you wrote to be odd. I believe there is limited appeal of $3000/$5000 at-home fitness bikes and treadmills, but that point stops with the price.
Accidents kill kids and adults. Stupid hurts as we like to say in our extended family. People die from a lot of things. From memory, prior to the pandemic, in the USA the leading cause of death for 1-4 year olds is drowning. Only know that because people have pools built in this area. But its not just pools, bathtubs, rivers, and lakes all factor in.
I’m not sure what is odd about Peloton designing a treadmill that needed to be recalled resulting in injuries, a death, and a huge loss for their company.
My point is that their super expensive treadmill was designed by a tech company and not a fitness company with decades of experience selling consumer equipment.
What is your point? That people were stupid and that the treadmill was perfectly safe?
I assume you know that other treadmills have killed kids as well? I assume you also know that many other treadmills are designed the same way and result in the same thing that happened to that child? One only needs to look to YouTube to see how it occurs (and it does occur), on other treadmills.
In this case, the Peloton Tread+ wasn’t really selling well anyway compared to the half-price base Tread. As much hand-waving wants to be made about them recalling (and obviously, they did), the reality is they didn’t bring it back/redesign likely because the market just wasn’t there once they undercut themselves.
