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🚴‍♂️ The Rise of Peloton: Revolutionizing Fitness through Connected Technology

You know the name, now learn the story

Read time: 5 minutes

Good morning! It's Thursday, April 25th. Today’s post looks at a brand we all know and have… a wide array of feelings about: Peloton


Peloton was founded in 2012 by John Foley and initially focused on developing its flagship product, the Peloton Bike. The company launched its stationary bike with built-in streaming technology in 2014 (known for it’s extra large screen), allowing users to access live and on-demand fitness classes from home.

Peloton's success lies in its commitment to providing a seamless and immersive workout experience. Users can buy Peloton equipment, such as their bikes and treadmills, as well as subscribing to their instructor-led workout classes. For $39/month users can sync their workouts directly to their Peloton equipment, a practice the company calls Connected Fitness Subscribers.

Fitness enthusiasts who have their own equipment but want to access their programs separately can do so through the Digital Subscription program on their phone or tablet for $12.99/month

By combining high-quality hardware with a vast library of instructor-led classes across various fitness disciplines, Peloton offers users a full-stack solution for their fitness needs.

Peloton's digital platform, which includes its app and subscription service, has been instrumental in its growth. Subscribers gain access to a wide range of workouts, including cycling, running, strength training, yoga, and meditation, all from the comfort of their own homes.

In the process, many of their instructors have gained loyal followings on social media channels, which they have leveraged to gain new users and even more brand awareness.

Growth and Then a Blunder

Up to and throughout 2019, Peloton experienced phenomenal growth. The company reported total revenue of $915 million for the fiscal year ending June 30, 2019, fueled by the popularity of its Connected Fitness Platform, which had over 563,000 subscribers. The company also boasted over 176,000 Digital Subscribers - those who subscribed to classes without owning Peloton equipment.

Although things seemed rosy for Peloton as 2020 neared, keen readers may remember a certain 2019 holiday ad, titled "The Gift That Gives Back," that garnered significant attention and sparked controversy due to its portrayal of a husband gifting his wife a Peloton Bike for Christmas.

The ad received widespread criticism on social media and in the press for its perceived tone-deafness and messaging. Many viewers interpreted the ad as promoting unrealistic body standards and reinforcing gender stereotypes, with some expressing concern about the implications of gifting exercise equipment to a spouse.

Following the release of the ad, Peloton's stock price experienced a significant decline, with shares dropping by over 9% in the days following the ad's release. Investors expressed concern about the potential backlash and negative publicity surrounding the ad, leading to a downturn in Peloton's market value.

In response to the backlash, Peloton issued a statement defending the ad and emphasizing the positive feedback it had received from customers. However, the company also faced pressure to address the controversy and mitigate the damage to its brand reputation. Peloton's CEO publicly acknowledged the criticism and pledged to learn from the experience, but the fallout continued to impact the company's public image.

Actor Ryan Reynolds even hopped in on the controversy and released a parody ad featuring the same actress from the original Peloton ad through his production company, Maximum Effort.

A Global Pandemic

Although it looked look Peloton would have a steep hill to climb to get back into the public’s good graces, nobody could have foreseen the COVID-19 Pandemic and the shuttering of gyms as everyone tried to mitigate spread of the virus.

This opened the door for Peloton to capitalize on the exact thing they had been building since their beginning - a full-service, at-home workout solution.

Peloton surged during the pandemic.

By the end of fiscal year 2021, the company reported:

  • total revenue of $4.03 billion, marking a staggering 99% increase year-over-year

  • Sales of connected fitness products, including its stationary bikes and treadmills in the fourth quarter alone, toppling $1.06 billion, marking a 54% increase year-over-year

  • Connected Fitness Subscribers of over 5.9 million, representing a remarkable 114% increase compared to the previous year

  • Digital Subscribers of over 891,000 reflecting a 404% increase compared to the previous year.

Peloton's market capitalization surged, reflecting investor confidence in the company's growth prospects in the new fitness frontier of at-home workouts. At its peak in early 2021, Peloton's market capitalization exceeded $40 billion, making it one of the most valuable companies in the fitness industry.

Comedown and the Future Ahead

Despite its unprecedented growth during the pandemic, Peloton has faced challenges in sustaining its momentum in the post-pandemic era. As restrictions eased and people resumed outdoor activities and gym workouts, the demand for at-home fitness solutions subsided.

Peloton's post-pandemic challenges extend beyond a slowdown in growth. The company has grappled with intensified competition in the home fitness market, supply chain disruptions, and manufacturing constraints.

Traditional fitness equipment manufacturers and tech-driven startups have entered the fray, posing a threat to Peloton's market position and profitability. Supply chain challenges have led to delays in product deliveries and increased costs, further straining the company's operations.

In 2023, Peloton’s revenue decreased by 22% to $2.79 billion, which was the second annual decline in revenue after posting $3.58 billion in 2022.

Peloton remains a prominent player in the fitness industry, with a loyal customer base and a strong brand presence. The company continues to innovate, diversify its product offerings, and expand into new markets.

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