Exercise equipment and media company Peloton shares slump following controversial Sex and the City scene.
The company’s shares have slumped by more than 16% since the show first aired on December 9, which saw Mr Big, played by actor Chris Noth, die after suffering a heart attack while using one of the company’s exercise bikes. While the company approved the show’s use of its bikes, it has said it was not told the details of the scene. Peloton issues a response stating that Mr Big’s lifestyle and family history were the likely cause of his death and that using one of its high tech exercise bikes “may have even helped delay his cardiac event.”
The latest share slump is yet another chapter in the company’s turbulent recent history.
The company started 2021 on a high
In May 2021, Peloton announced its plans to build a 200-acre site in Ohio, which will include more than 1 million square feet of manufacturing, office and amenities space, according to the company. The factory will bring 2,000 jobs to the area and is expected to be up and running by 2023.
The announcement came following a stellar year for the fitness brand, which has been a major beneficiary of the pandemic. Peloton has grown to become a household name amid the pandemic era and has attracted a loyal fan base of 4.4 million members through its range of tech-infused stationary bikes and treadmills.
Lockdowns have seen consumers seek new activities and sports to maintain fitness levels, which has led to behavioural shifts in the choice of workouts.
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Supply chain and safety issues have plagued Peloton
In the fourth quarter ending June 30th, 2021, Peloton’s revenue rose 54% to $937m, including a 132% increase in subscription revenue to $281.6m. However, it reported a net loss of $313.2m, compared to a profit of $89.1m the year earlier.
Peloton currently manufacturers its products in third-party facilities in the Asia-Pacific region (mainly in Taiwan) despite most of its customers being in the US. While this has helped keep manufacturing costs down, it has also led to long shipping delays, caused by both heightened demand and logistical issues brought about by the Covid-19 pandemic.
The news followed the company’s decision to slash the price of its original Peloton Bike by 20%, from $1,895 to $1,495, the second time in the year that the firm had cut the price of its Bike product.
The company’s success has also been tainted by safety issues. On 5 May 2021, Peloton recalled treadmills in the US and UK over a series of safety issues following investigations by a US watchdog. In the US, 125,000 Tread and Tread+ machines are currently being recalled following the death of a six-year-old child. In addition to the death, there have been about 72 reports of adult users, children, pets and objects being pulled under the rear of the treadmill.