- Wall Street analysts don’t think Peloton’s struggles spell the end of the home fitness industry.
- Peloton’s upcoming earnings could be promising in its digital subscription product.
- Home fitness equipment, excluding Peloton products, had sales of $3.3 billion between January and November 2021.
platoon had a disastrous month — but industry analysts don’t think the drama heralds the end of the at-home exercise craze.
After Peloton shares soared 440% in 2020 and the company struggled to meet demand, Peloton shares plunged below its 2019 IPO price January 20.
CNBC reported that the company saw a “significant reduction” in demand for its products and would halt production of its exercise bike for two months. Platoon CEO John Foley denied that Peloton planned to stop production of new bikes and treadmills in a letter to employees.
Peloton’s digital subscriptions could reveal the company’s true health
Peloton’s struggles could suggest more Americans are leaving their homes to exercise. online searches for “gyms near me” jumped to mid-2021, and fitness planet recently announced plans to buy more gyms in hopes that more Americans will want to get back in shape in person.
In May 2021, IBIS World researchers predicted that fitness manufacturing industry revenue would grow at an annual rate of 1.4% to $2.1 billion over the next five years. But some of the growth comes from a projected rise in the gym and fitness club industry, which would allow gym owners to buy higher-quality domestic products.
But luckily for Peloton, the company isn’t just relying on hardware sales to grow its overall business: Peloton’s digital subscriptions, which give users access to a library of live and on-demand exercise classes, including yoga, strength training, boxing and more. — account for two-thirds of the company’s revenue, according to Kenneth Leon, director of research at CFRA Research.
Analysts at Raymond James said demand for Peloton hardware will likely continue to decline, but they expect “more color” in the Peloton subscription service on their next February earnings call.
Analysts remain bullish on home exercise and digital health
The team has always acted as a way to lock the customer into the product and service, CFRA’s Leon said. He added that it’s too early to say whether Peloton’s disastrous month will affect the home fitness market as a whole.
“It is still a nascent market that is growing: health and wellness,” he added.
The landscape for physical activity at home and
digital health
businesses remains promising, with sales of home fitness equipment, excluding Peloton bikes and treadmills, rising to $3.3 billion between January and November 2021, according to NPD Group, representing growth of 97% compared to the same period in 2019.
Leon said big tech companies could be drivers of growth in digital health and fitness. Facebook is reportedly working on a smart watch Y Apple has continued develop your Fitness Plus service.
Top investors in health and biotechnology recently told Insider that funding for digital health companies could generate $20 billion by 2022. Investors were particularly bullish on startups related to mental health, personal health tracking, maternal wellness, and innovation in care delivery.
“It remains to be seen who dominates the market,” León said.
