Spinning out
Peloton's downhill ride
Good morning, endurance enthusiasts. This is your Stock Market Rundown for February 12th, 2024. Thanks for joining me for another week of stock shenanigans. Let’s get started:
TODAY’S TOP STORY: PEDALING PROBLEMS
During the pandemic, it seemed like everybody was getting a Peloton. The internet-connected exercise bikes promised a fitness routine that would let you get fit by frantically pedalling nowhere while listening to Pitbull remixes.
Peloton’s model: sell pricy hardware, then have users pay a monthly subscription fee to get access to streaming classes. Fans ordered so many that there were months-long shipping delays. Popular Peloton instructors became celebrities.
Peloton went public in 2019, and reached a pandemic-fuelled peak valuation of $50 billion. But it’s been downhill from there, as the trend faded when gyms reopened. Peloton’s market value is now below $2 billion; the company laid off more than 5,000 workers and canned top execs—including the founder.
Management has been trying to turn the business around for the past two years, but nothing has really stuck. Now, Peloton has cut its annual revenue forecast as demand sags even more.
Fitness equipment is a fad-driven market. Remember the Thighmaster? The NordicTrack? Each new device comes into our homes promising six-pack abs, but after a few months becomes a drying rack for your freshly-laundered jeans. Sticking with an exercise program is tough, and Peloton didn’t solve that.
Plus, Peloton didn’t exactly invent the concept of spin class. A dozen rivals have popped up selling cheaper copycat bikes. Oh, and hopping on a stationary bike at the local Planet Fitness while watching Mr. Beast videos on your iPhone is still an option, too.
SO WHAT ELSE IS GOING ON?
Snapchat’s stock plummeted on earnings that missed expectations. The days of Snap “streaks” having the back row of math class in a chokehold are over.
While nobody would confuse the fluorescent-lit aisles of Target with a country club, the retailer wants to add some exclusivity—it’s introducing a paid membership program. This will just encourage your Aunt Debbie who still thinks it’s funny to refer to it as “Tar-Zhay”.
Ford’s stock rose as the company upped its dividend and scaled back investments in electric vehicles. Giving cash back to shareholders, rather than pouring it into cars nobody wants? These guys are management geniuses.
Uber beat expectations as rideshare revenue jumped. I feel like Uber in 2019 was $15 to get to the airport and you got a free bottled water, versus Uber today is $45 to get a few blocks and you get a free lecture on why crypto is the future.
That's the end of today's briefing, pals; let’s reconvene bright and early tomorrow. Yours in capitalism, The Axe