What's going on?
Okay, Peloton in New York, let’s do this: the luxury exercise equipment-maker made its quarterly update count late on Wednesday, and its stock dug deep to climb 17% higher on Thursday. Great job, you smashed it!
What does this mean?
$2000 price tag or not, Peloton’s workout bikes didn’t seem too expensive for the higher-than-expected number of customers who bought them last quarter, which led to 66% higher revenue versus the same time last year. Likewise, Peloton’s digital subscription revenue rose by 64% as would-be gym bunnies hunkered down in their rabbit holes, only popping their heads up to scout out fresh workout content. And in what’s become a rare feat among recent earnings reports, the company even raised its revenue forecast for this quarter.
Why should I care?
For markets: They’re neck and neck!
Since the company’s stock market debut last year, analysts have been debating whether Peloton would attract and keep enough customers to become a lasting business. And its latest update added fuel to both sides’ fires: a raft of new customers suggested coronavirus might’ve accelerated the home workout trend, sure, but the sky-high percentage of monthly – rather than annual – subscriptions hinted customers might be poised to flock back to their gyms (tweet this). Still, the naysayers seem to be losing the argument for now: Peloton’s stock was up 34% this year before Thursday.
For you personally: If it’s good enough for you…
In a textbook example of how a brand can try to increase its customer appeal, Peloton’s planning to broaden its product range with a rowing machine and a cheaper treadmill. The company might be hoping that if it turns you into a die-hard customer, you’ll become an investor too. Warren Buffett, after all, reportedly invested in Coca-Cola because he liked the taste of the soft drink and figured others would too – making the business one he understood and, in turn, meeting one of his investment conditions.