It's impossible to crash a stationary bike but Peloton managed to do it

Luay Rahil

People are jumping off the bike, and nothing is going right for Peloton.

Last year, Peloton convinced everyone that they need to spend $2000 on a stationary bike that doesn't go anywhere. The company managed to own the home-workout market in 2020, but they lost one-third of their value this year.

With the widespread of vaccination, people are more comfortable going to the gym so. They are jumping off the bike. This is very negative news for Peloton. The company chief financial officer said, "We underestimated the reopening impact on our company." This is troubling because the company plans to build a new headquarter, improve its production line, and hire more people. Now, the company has to follow a different approach.

CNBC reported that Peloton paused hiring across all divisions effective immediately during an all-hands meeting. They also slashed its full-year outlook among slowing momentum for its fitness products.

To put it in perspective, the company lost $10 billion of its market value in one day, and their CEO John Foley is no longer a billionaire. That's a lot of money, so the company needs to redirect itself and incorporate its products into offices and gyms.

The company needs to be ready to compete with gyms and other companies coming after them to gain some of the home-workout market shares.

Vari has the solution.

John Foley needs to get on the phone with Vari CEO Jason McCann. Vari had the reverse problem. At the beginning of the pandemic, they had to shift their model from focusing on offices to home offices. So early this year, Vari introduced a new line of furniture focused on serving people who work from home – the Essential Collection. The Essential Collection helps people elevate their home workspace with simple, quality products at an affordable price point.

Peloton and Vari's business model relies on three things, attracting new customers, converting leads, and retaining existing customers by providing them a tremendous value which helps increase customers' lifetime value.

Brian Maher, Vice President of Information Analytics at Berkeley College, believes that Peloton is in real trouble, "I've always said that Peloton is a one-trick pony. People who truly know fitness know that, like sports, more is better."

Maher adds, "Being a one-sport athlete is not good for the physical or emotional well-being of the athlete, and the same applies to fitness. You need a more diverse approach. It can't just be one style or form of exercise. The mind grows weary and bored, and the body adjusts."

Philip Webster, Managing director of Pragmatiks Consulting, has another bleak assessment for Peloton, "We are creatures of habit and like what we know. So, if you used to go to the gym, you'll end up going back to the gym; if you used to go to the office, you'd crave going back to the office."

I don't know what the future is hiding for Peloton, but I know the company's future wont be easy.

If you were Peloton's CEO, what would you do?

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Writing on leadership, business, and culture.

Fort Worth, TX

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