Analysts Favor Peloton As Stay-At-Home Customers Take To Home Workouts

Analysts believe that Peloton Interactive Inc. PTON will continue to gain momentum as people turn to home workouts to maintain fitness during widely imposed stay-at-home orders.

What Happened

Peloton, which went public last year, sells home workout equipment bundled with a streaming service composed of exercise classes for $12.99 per month. The company is currently giving away a 90-day trial of its service, which is usually valid for a month, reported CNBC.

Peloton also offers an app, which offers workouts for those people without its exercise equipment. The total downloads of this app rose fivefold in March compared to February. According to analyst Lee Horowitz of Evercore ISI, the conversion rate from the app to equipment is nearly 10%.

Horowitz wrote in a research note, “With the most up-to-date data through March, we are seeing Peloton subscriber growth and engagement clearly benefiting from global quarantines.”

On Tuesday, Wedbush’s James Hardiman told CNBC, “If you go as far to buy the bike, you’re not somebody who’s planning on going back to traditional fitness patterns, once you’re bought in you’re bought in.” He reflected, “That is not a temporary uptick in demand. That will have a lasting impact.”

Why It Matters

Peloton claims to be the “largest interactive fitness platform” in the world, with over 2 million members.

In its Q2 results, as of December 31, Peloton reported a rise in quarterly revenue by 77% to $446.3 million. In the same period in 2018, the company’s revenue stood at $262.9 million.

What Else 

While Peloton finds favor with analysts, there has been a growth in the sale of home exercise materials like Yoga mats, which have risen up the ranks on Amazon Inc.’s AMZN best-selling product list. 

Price Action

Peloton shares traded 0.94% higher at $26.80 in the after-hours session on Tuesday. The shares had closed the regular session 4.15% lower at $26.55.

Photo Credit: Courtesy of Peloton.