A Big Week for Peloton

Booming Demand for At-Home Fitness

Demand for at-home fitness equipment and programs has surged since the start of the COVID-19 pandemic. Investors are carefully watching Peloton (PTON), which makes stationary bikes and treadmills, and offers instructional content to go with them.

The company’s sales were up 66% during its latest quarter which ended on March 31. At the end of this period, Peloton’s subscriber base was up 94% year-over-year. Peloton’s shares have risen by over 180% in 2020 and it reached a market cap of $22.8 billion.

This week is an important one for Peloton. It is rolling out several new equipment offerings today, and will deliver a highly anticipated report on its fiscal fourth quarter tomorrow.

New Products and Pricing Strategies

Peloton is launching a number of new products today with the goal of reaching a wider customer base through new pricing strategies. Peloton CEO John Foley explained, “The idea that this is only accessible to rich people is obviously nails on a chalkboard for me as a business leader, as a human, and as an American.”

For some time, Peloton only offered two main pieces of workout equipment—a stationary bike which costs $2,245 and a treadmill which costs $4,295. As of today, it will sell a Bike+ for $2,495. It will sell its older bike for $1,895, and a new treadmill model for $2,495. The company said that more products will be coming soon, and it will continue to focus on pricing them strategically.

Fierce Competition

Peloton faces steep competition in the at-home workout sphere. Conventional gyms like Equinox Group and Planet Fitness (PLNT) have created virtual fitness classes as many of their brick-and-mortar locations remain closed. More direct competitors like NordicTrack and Echelon Fitness offer less expensive bikes, as well as rowers, ellipticals, and other equipment. Additionally, Lululemon (LULU) just paid $500 million for Mirror, a virtual workout system that costs $1,500.

Analysts expect the demand for at-home workout equipment and virtual classes will remain strong even after the pandemic subsides. Competition in the industry is likely to stay fierce. Investors will be eager to see how Peloton’s new strategies pan out, and to gain insights about the company’s most recent quarter from its earnings report tomorrow.

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