Peloton gains pandemic dadbod

2 minute read

A Peloton exercise bike is seen after the ringing of the opening bell for the company's IPO at the Nasdaq Market site in New York City, New York, U.S., September 26, 2019. REUTERS/Shannon Stapleton/File Photo

Register now for FREE unlimited access to Reuters.com

NEW YORK, Jan 21 (Reuters Breakingviews) - Peloton Interactive is degenerating. A CNBC report that the company was pausing equipment production vaporized about a quarter of its market value on Thursday afternoon. And the cash-burning outfit still faces waning demand and the pandemic’s end.

Exercise trends often have short lives, and in a few ways Peloton got lucky. The company floated shares just months before the pandemic forced people to stay home, with excess time and money to spend on interactive fitness gear and classes. Shares went from around $20 to more than $160 apiece between March 2020 and the end of that year. The stock has declined steadily since January 2021, a few weeks after read more Covid-19 vaccines began appearing.

The company’s operations and investment have burned over $1 billion in the past two quarters. A stock sale in November, shortly after Peloton said it didn’t need cash, refilled this hole. But an unwise decision to purchase read more factories and excess inventory not only indicates worsening cash woes but an over-optimistic management team, too. Peloton’s shares are now at their pre-pandemic level. Things will probably go downhill from here. (By Robert Cyran)

Register now for FREE unlimited access to Reuters.com

Follow @Breakingviews on Twitter

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own. Refiles to restore byline.)

Capital Calls - More concise insights on global finance:

Netflix’s CEO duo look too high up read more

French vaccine success will leave mark on UK read more

Rivian’s investors prove an expensive ride read more

P&G hits a Covid-19 high note read more

Lagging UK stocks are red meat for activists read more

Register now for FREE unlimited access to Reuters.com
Editing by Lauren Silva Laughlin and Katrina Hamlin

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.