Peloton delivered strong results in its first post-IPO report, but the connected fitness company still failed to win over investors
By Dan Gallagher Updated Nov. 5, 2019 9:00 pm ET Peloton PTON -7.60% has a competition problem. Its rivals, though, aren’t today’s companies but yesterday’s. Peloton seems to be doing just fine against gym memberships and cheaper exercise bikes.
The company’s fiscal first-quarter report on Tuesday showed revenue from both the sale of its equipment and its subscription-based workout classes more than doubling from the same period last year. The company also added more than 51,000 subscribers to its service in the September quarter—65% more than it added in the same period last year. Peloton’s true competitors—at least in the eyes of investors—seem to be fitness fads of the past, a graveyard of companies and products that were hot until they were not. And with some notable exceptions such as Planet Fitness, public markets haven’t always been keen on the fitness category anyway. Many privately held gym chains have faced financial difficulty. SoulCycle filed for an initial public offering in 2015 but never got out the door. YogaWorks delisted its shares this summer at a fraction of its offering price less than two years earlier. Those memories have hung over Peloton since its poorly received IPO in late September, despite sharp differences in the company’s business model. Peloton’s share price had already slid 15% from its listing price ahead of Tuesday’s results. It is also one of the very few IPOs this year besides Uber to decline on its first day of trading. Strong results that solidly beat Wall Street’s projections for its first quarterly report as a public entity weren’t strong enough to turn that tide. Peloton’s share price slipped another 7.6% Tuesday. Peloton will need to keep up its current pace of growth for a while to overcome that sentiment. The catch is that public investors are turning against the grow-at-any-cost mind-set, thanks in large part to the debacle of WeWork’s canceled IPO that marred Peloton’s own debut. Peloton CEO John Foley said on Tuesday’s conference call that the company “could be profitable tomorrow” if it eased up on growth. But at this point, it is hard to see which version of Peloton investors would prefer more.Peloton is one of the few IPOs this year to see its stock price decline on its first day. An earlier version of this article incorrectly stated it was the only other one besides Uber.
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