Holiday Ad Not the Only Concern For Peloton’s Suffering Stock

Peloton and its model of on-demand video cycling classes has come under fire after the release of a new commercial that has been criticized by some as sexist and classist. Scott Heins/Getty Images

At-home spin startup Peloton has had a rough holiday season, and not just due to that viral commercial everyone’s talking about.

The New York-based company, which went public in September, has fallen victim to 2019’s tech unicorn woes of having shareholders uncertain about its business model and lack of profitability. In fact, some investors are predicting Peloton stock can plunge down to $5 per share, a steep drop from the $29 it set for its IPO.  

This week the startup’s CEO, John Foley, addressed the rising concerns about the brand’s future, pointing to examples of added revenue via its recent introduction of lower-end treadmills.

“They see sticker shock, it seems very expensive,” Foley said at the annual UBS tech and media conference, avoiding mention of the “Gift that Gives Back” ad backlash. “The opportunity for us is to really connect the dots,” referencing Peloton’s financing, which allows new customers to receive its hardware at a low monthly payment.

“It’s an insane value,” Foley continued. “We’re changing lives, allowing people to get more fit, more healthy, more endorphins…be better versions of themselves and all this existential stuff, but we need to communicate that better.”

Banking on digitally-connected treadmills to help raise its revenue margins doesn’t seem to be impressing analysts, who say there are plenty of similar machines on the market consumers can choose from. Not to mention, Peloton already offers a $4,000 treadmill that hasn’t taken off the way its bike has, though the new version is expected to cost way less. The company also has an on-trend rowing machine in the works, signaling a strategy to offer a wider range of instructor-led online classes to its growing subscription service.

While it’s known for its luxury products, which have come under fire in instances such as the holiday ad, Peloton is exploring ways to widen its market share with more accessible hardware.

Holiday Ad Not the Only Concern For Peloton’s Suffering Stock