Summary of The Rise And Fall Of Peloton

00:00:00 - 00:05:00

Peloton was a company that made a fortune during the pandemic, but their success appears to have been built on a house of cards. Their stock price plummeted after reporting terrible earnings results, and their problems go beyond simply being unprofitable. As the pandemic begins to recede, Peloton's growth may not be sustainable.

• 00:00:00 Wall Street Millennial covers the rise and fall of Peloton, a company that made a fortune during the pandemic. However, their success appears to have been built on a house of cards, as their stock price plummeted after reporting terrible earnings results. Peloton's problems go beyond simply being unprofitable; they have also been burning hundreds of millions of dollars on sales and marketing, something that any brand can do if they have enough money. As the pandemic begins to recede, Peloton's growth may not be sustainable.
• 00:05:00 In 2021, Peloton's sales were rapidly evaporating, and their price cuts were not enough to offset the loss of consumer demand. By September 30th, their revenue from connected fitness products had decreased by 17%. Their subscription revenue continued to grow strongly, but their connected fitness products is a leading indicator of subscription revenue, so we will likely see a major deceleration in subscription growth in the coming quarters. Additionally, Peloton started incinerating cash at an alarming rate, their operating loss for the quarter was almost double their operating losses from the entire previous year, and on closer inspection their 17 decline in connected fitness product sales is actually even worse than it initially appears. Their path to profitability has become even more uncertain, and their one possible saving grade is subscription revenue. After covering the fixed cost of producing the workout classes in their studios almost 100% of their revenue from the 39 subscription payments goes to the bottom line, the idea is that once they achieve scale, they'll become extremely profitable because they'll have so many subscribers for their fitness classes. However, with their bike sales falling and their ability to sell subscriptions diminishing, their future looks bleak. Zoom communications, Vaccine maker Moderna, and Zoom Communications are all down more than 50% from their all-time