As gyms reopen with new rules after the coronavirus pandemic forced them to shut down for months, Peloton is making a play for new members who would rather work out from home.
The at-home fitness company announced on Tuesday that it will reduce the cost of its most popular spin bike by $350 “to make it more accessible to more people,” according to an email from Peloton. The bike will now cost $1,895. Peloton is also offering a premium new Bike+ with added features, such as a rotating touchscreen and four-speaker sound system. A new lower-priced treadmill will also be available for $2,495 early next year, offering an alternative to Peloton’s premium $4,295 product.
“As consumers increasingly work out from home amid the pandemic, these new product offerings should help Peloton expand its [market base], particularly as they help reduce the total cost of ownership for consumers,” said a note from AllianceBernstein analysts.
After the new products and price points were announced, shares of Peloton jumped as high as 9 percent. The company’s stock is up more than 200 percent for the year.
“We believe PTON is very well positioned entering 2021 with a broader product suite, and with Tread market size potential two-to-three times that of the Bike and largely not reflected in our estimates,” Doug Anmuth and Cory Carpenter, analysts for JPMorgan Securities, wrote in a note.
Peloton is also offering existing customers a $700 credit to trade in their old bike for the new Bike+, which the analysts noted “creates an interesting secondary market opportunity.”
While the pandemic has battered most industries, Peloton has been one of the few companies that has been uniquely positioned to grow during the new work-from-home era. Mirror, a connected fitness system that offers at-home classes, was acquired by Lululemon in June for $500 million as more people looked for options to get fit from home while gyms were closed. Gym chain Equinox, which owns SoulCycle, will start selling its own connected bikes and treadmills this winter and also has a new at-home workout app, Variis, to appeal to members who want to work out from home but don’t want to cancel their club memberships.
“Right now, Peloton is having a tough time keeping up with the surge in demand. And so, while I would expect the demand for Peloton products to decelerate somewhat once a vaccine is available and people feel more comfortable in gyms, the company should have a couple quarters of catchup just to satisfy the people who have already put in orders,” said James Harriman, managing director of travel and leisure at Wedbush Securities. “Longer term, the growth rate will eventually slow, but I believe Peloton has a very long runway for growth.”
The shutdown hit the entire fitness industry hard, since gyms were some of the first businesses to close and the last to reopen due to ongoing safety concerns about the coronavirus. There are an estimated 40,000 to 50,000 health and fitness clubs in the United States, serving 73 million members last year, according to the International Health Racquet & Sportsclub Association.
The gym industry lost $700 million per week during the height of the shutdown, with an estimated $10.3 billion wiped out by Aug. 1, according to Meredith Poppler, vice president of communications for the IHRSA. Without Congressional relief, the trade group forecasts as many as 25 percent of fitness clubs could close by the end of 2020.
“At-home solutions, such as streaming classes, Peloton and Mirror are great options for some. Anything to help people be active is a win,” Poppler said. “But for the most part, the best, most well-stocked home fitness option cannot compete with the sense of community and motivation a club provides, nor can it provide the qualified staff, variety of equipment and programming options of the neighborhood gym.”
— to www.nbcnews.com