The company spent the entire year in 2022 trying convince the world else that it’s good. But is anyone really convinced?
2021 was a bad year for Peloton. The company’s stock fell. The premium treadmill of the company caused the death of a child and injured others, and ended ending up being recall. Its new, budget-friendly treadmill was also recall before it had even been officially went on sale. In the end of December Peloton had become the subject of the jokes that everyone was making after Mr. Big, a major Sex and the City character was killed on his Peloton Bike in the initial Episode of the sequel to HBO’s series. And Just Like That …. Peloton attempted to clap back with a sly commercial. The idea did not work. It ended the year with whispers about a possible sale.
Yet, somehow, 2022 was better.
Peloton began its 2022 season by fumbling, which was and then a second TV character suffering from an heart attack on their bike. Then, when then-CEO John Foley stepped down, 2800 employees were dismissed and the company gave the employees a year free for Peloton membership. The new Chief Executive Officer Barry McCarthy told The Wall Street Journal that the company had just six months to prove that it was a viable independent entity. He was then surprised that the WSJ did not depict the decision to cut 500 workers as an indication of the company’s growth.
Despite its goal of taking back the reins of its own narrative all Peloton has been able to do is put its tongue in its own. It’s likely that it has been a problem since McCarthy attempted to portray the $1.2 billion profit as “substantial improvement,” using a convoluted analogy that compared Peloton to a falling cargo vessel in the middle of a bold Mediterranean rescue.
It wasn’t an ideal season for Peloton products too. Peloton’s Peloton Guide hasn’t started to take off, and it’s been a long time since the Peloton Row has been the victim of issues with supply chain. The Row was teased to May. Preorders started in September and delivery were planned for December. In the Q1 2023 earnings conference, McCarthy confirmed that Peloton’s rower inventory was limited even though it anticipated the demand to increase. Both products were good. I was happy with both products when looking at them. They weren’t enough to help give Peloton its momentum.
Earnings call immediately following the earnings conference, McCarthy tried to convince investors that the company was turning around its fortunes, only to watch the price of its stock fall even more. Investors are happy to see the numbers rise and not down. This is why it’s understandable why investors aren’t convinced by Peloton’s story of a comeback. (One activists’ group put out a brutal 65-page slideshow about the many ways Peloton has cooked up a royally delicious Golden Goose.)
The most important thing to note is that the business cut over 4,500 workers from its workforce over 4 rounds of job cuts. The company also shut down its manufacturing operations in the US after having invested thousands of dollars and decided to cut down its retail footprint. In the present its shares have dropped 90 percent of their value over the last twelve months.
However, it is true that turnarounds aren’t easy and require time. But the more severely you fall the longer it will take to get your feet back and the more difficult it becomes to build. Peloton fell real hard.
However, it’s difficult to eliminate the company completely. The content isn’t changing and even though the popularity of connected fitness has slowed down, it’s far from being over. Peloton remains a reliable product, even with an untrustworthy business strategy. For Peloton its customers, they’re an extremely loyal, hardcore group. However they’re not exactly the kind of people Peloton must win over.
In 2023 the issue won’t be a matter of if Peloton will be able to recover. It’s about whether everyone else will be willing to give it a chance.
