- Let's go!
(industrial music)
- [Reporter] Over the last two years,
fitness sensation Peloton has been on a wild ride.
(cheers)
Even before the pandemic,
the subscriber-based company had amassed a cult following.
And at the height of the pandemic,
shares reached all-time highs.
- No one is getting left behind.
Peloton is for anyone who wants it.
- [Reporter] But then, almost suddenly,
the world, and Peloton's luck, shifted.
Gyms and offices began reopening
as lockdown restrictions were lifted
and over a single year,
the company lost nearly all
of its pandemic stock market gains.
Here's how Peloton,
the once high flying fitness craze, spun out,
losing billions of dollars in market share in the process.
Peloton launched a decade ago
as a stationary bike company that had big aspirations
for democratizing the fitness world.
- Peloton had this vision pre-pandemic even
that everyone who had broadband internet
would want a Peloton and could afford a Peloton.
- Laura Forman covers technology
for the Heard on the Street column
at the Wall Street Journal.
She says that the company's subscribers
were primarily wealthy consumers
with the means to invest in high-end exercise equipment
with a monthly subscription fee.
- This is a company that wanted to be accessible
but gained a cult following
because it was the opposite of that.
It was aspirational
and it really became this whole lifestyle.
That's one reason.
And then the second reason is just people were obsessed
with the content.
- [Reporter] But the company knew that to continue to grow,
it needed to expand its user base.
And in early 2020, as the world shut down-
- [Speaker] Keep a safe distance of six feet from others.
- [Reporter] Demand for home exercise equipment surged
- People weren't traveling, they weren't going outside,
so maybe they had some of that budget
that they could sort of allocate to fitness.
- Peloton, come on.
Let's get this workout started.
- [Reporter] And with the surge in demand,
the fitness company became a big success.
Its market value grew considerably,
reaching almost $50 billion in early 2021,
up from just $7 billion two years prior.
Over a single year,
the company gained almost a million new subscribers.
But even in the midst of its success during the pandemic,
Peloton was already facing issues.
By late 2020, as demand for its products soared,
the company was racing to fill orders,
but it was struggling to keep up.
Complaints from customers about delays
and missed deliveries mounted
and Peloton's share price began to plunge.
- They invested a ton in sustaining this monster growth
that was never going to be sustainable.
- [Reporter] And then in March 2021,
a fatal incident occurred
involving Peloton's high end treadmill.
- Tragic Peloton accident
that resulted in the death of the child.
The company is issuing new warnings to owners
in the wake of the accident.
- [Reporter] The incident pushed Peloton
to recall its treadmills and this move was costly.
Peloton estimated that recalling and halting sales
of its treadmills would cost the company around $165 million
over a single quarter in 2021.
- It really threw cold water on the notion
that Peloton can continue to grow.
Maybe they were growing too quickly
or they weren't really putting as much thought
into every product.
- [Reporter] Trouble for the company continued
into the summer of 2021.
As vaccines became more widely available
and gyms began reopening,
the company faced mounting challenges.
- When the world opened up and all the people
who could afford a Peloton already had one,
you saw demand start to decline.
- [Reporter] In the attempt to appeal to a broader audience,
Peloton slashed prices, but as demand continued to fall,
the move ended up hurting the company's bottom line.
By the end of the year, Peloton's stock had plummeted ,
losing more than three quarters of its value
from its December 2020 high,
which erased most of its pandemic era gains.
The company's market value had dropped about 85%.
Then in early 2022, the company changed its price decision
and added hundreds of dollars in fees
to its bike and treadmill,
a move that came as the company grappled with waning demand.
And for some investors, the situation looked dire.
Around the same time,
news broke that Peloton was temporarily halting production
of its connected fitness products
amid a company-wide hiring freeze.
- Peloton, the shares reopened after being halted twice.
They're now down more than 20%.
- [Reporter] Just weeks later,
under pressure from an activist investor,
the company announced it would be replacing its CEO
and cutting 2,800 jobs, about 20% of its workforce,
in an effort to get back on track.
- The changes announced are exactly the types of things
that investors and analysts want to be seeing.
It's a new manager, a new cost structure.
- [Reporter] Forman says it's no coincidence
that the new CEO, Barry McCarthy,
was the CFO of Netflix and Spotify,
both lower-price, subscription-based companies.
- Some think Barry's gonna come in
and completely change the company,
from a company that was aspirational
to a company that truly is accessible
with really lower-price subscription models.
Others think there's really no hope for the company
and it just needs to get sold.
- [Reporter] But one thing is for certain,
the road ahead for Peloton is a steep climb.
(futuristic music)