Is the COVID Boom Over? 'Nasdaq Cinderella' Peloton Plummets 30%

US Home Fitness Equipment Seller
Experiences Decline as COVID-19 Benefits Fade

▲Home training exercise equipment Peloton [Photo by Peloton website]

[Asia Economy Reporter Kwon Jae-hee] Peloton, the 'Cinderella of Nasdaq' loved by Biden, is plummeting. It fell nearly 30% in after-hours trading on the day. There is an assessment that Peloton, which rapidly grew due to the 'COVID-19 special,' has lost its growth momentum as vaccine distribution expands.

On the 4th (local time), U.S. home training equipment seller Peloton announced its Q1 2022 (July-September 2021) earnings, recording $805.2 million (about 954.5 billion KRW). This is below the market forecast of $810.7 million. Compared to the same period last year ($757.9 million), it increased by 6%. This contrasts with the 250% sales surge recorded in the same period last year.

Net income, meaning pure operating profit excluding all other expenses, recorded a loss. Peloton posted a net income of $69.3 million in the same period last year but recorded a net loss of $376 million this time.

John Foley, Peloton CEO, stated in a letter to shareholders, "2022 will be a very challenging year considering demand uncertainty due to economic recovery, supply chain crises, and raw material cost pressures."

Peloton's disappointing performance is largely analyzed as the disappearance of the 'COVID-19 special' as COVID-19 vaccinations spread. Peloton rapidly grew thanks to the COVID-19 benefit as home training demand increased when visiting indoor gyms became difficult due to the pandemic. Additionally, Peloton's poor performance was influenced by pouring $284.3 million, about 35% of sales, into sales and marketing expenses.

The future market outlook is not bright either. Companies like Tonal, Hydrow, and Mirror are entering the home training market.

Accordingly, Peloton's stock price fell 4.27% during the day and dropped 29.96% in after-hours trading, closing at $60.28 per share.

Simeon Siegel, an analyst at investment bank BMO Capital Markets, evaluated, "What Peloton has achieved is remarkable, but the trajectory of growth is not infinite."