As gyms reopen with new rules after the coronavirus pandemic forced them to close for months, Peloton is hosting a game for new members who would rather train at home.
The home fitness company announced on Tuesday that it will slash the cost of its most popular exercise bike by $ 350 “to make it more accessible to more people,” Peloton said in an email. The bike will now cost $ 1,895. Peloton also offers a new premium Bike + with additional features such as a rotating touchscreen and a four-speaker audio system. The new lower priced treadmill will also be available for $ 2,495 early next year, offering an alternative to the $ 4,295 Peloton premium product.
“As consumers increasingly work from home amid the pandemic, these new product offerings should help Peloton expand its [market base], especially because they help lower the total cost of ownership for consumers, ”said AllianceBernstein in a statement.
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Peloton shares jumped 9% after the announcement of new products and prices. The company’s shares are up more than 200 percent in a year.
“We believe PTON is very well positioned in 2021 with a wider range of products and with the potential for a tread market size two to three times that of a bicycle, which is largely not reflected in our estimates.” – Doug Anmouth & Corey Carpenter, JPMorgan Analysts. Securities written in a note.
Peloton is also offering existing customers a $ 700 loan to exchange their old bike for a new Bike +, which analysts say “creates an interesting aftermarket opportunity.”
While the pandemic has hit most industries, Peloton was one of the few companies uniquely positioned to grow in the new era of work from home. Mirror, an internet-connected fitness system offering in-home activities, was acquired by Lululemon in June for $ 500 million as more people looked for opportunities to recover from home while gyms were closed. Equinox, which owns SoulCycle, will begin selling its own connected bikes and treadmills this winter, and has a new Variis home workout app that will appeal to members who want to workout from home but don’t want to give up their club memberships.
“Peloton is struggling to keep up with the growing demand right now. And so while I expect demand for Peloton’s products to decline slightly as the vaccine becomes available and people feel more comfortable in gyms, the company should have a couple of catch-up blocks to satisfy people who have already placed orders, ”said James Harriman , managing director of travel and leisure Wedbush Securities. “Over the long term, growth will eventually slow, but I believe Peloton has a very long way to grow.”
The shutdown has hit the entire fitness industry hard, as gyms were among the first to close and last to reopen due to ongoing security concerns surrounding the coronavirus. According to the International Association of Health Rackets and Athletic Clubs, there are between 40,000 and 50,000 health and fitness clubs in the United States, serving 73 million members last year.
According to Meredith Poppler, vice president of communications for IHRSA, the gym industry was losing $ 700 million a week in the midst of closures, with $ 10.3 billion lost by August 1. The trade group predicts that up to 25 percent of fitness clubs could close by the end of 2020 without help from Congress.
“Home solutions like streaming classes, Peloton and Mirror are great options for some. Anything that can help people be active is victory, ”Poppler said. “But for the most part, the best, most complete home fitness option cannot compete with the community and motivation that the club provides, nor can it provide the skilled staff, varied equipment and programming capabilities of the nearby gym.”
