A spin through Peloton’s earning reports: Peloton suffers a 1.2 billion dollar loss after selling 1500 bikes

Alex James, Staff Writer

Now that quarantine has ended and gyms are back open, Peloton’s earnings have declined significantly, ultimately losing a total of $1.2 billion. After Peloton’s earnings and stocks skyrocketed during lockdown, they had trouble keeping up with demand. The company has been dealing with significant troubles since COVID-19, as its stock lost about two-thirds of its value just this year.

Peloton sales had a rapid increase beginning in March of 2020 when people realized that their options of activities were severely limited. As life returned to normal, the company began to decline. Last year, Peloton announced a plan to build a $400 million factory in Ohio but has since scratched the proposal due to their financial struggles. Along with this, Peloton is forced to cut back on the number of warehouses. 

“I don’t think the cost is worth it, and I think the benefits of going outside and being in the sun and being active outweigh how expensive it is. I think I probably wouldn’t purchase one now, because I would instead go to the gym or ride my bike outside,” Miami Palmetto Senior High sophomore Maddie Sakalo said. 

Since Peloton stock’s peak in December 2020, it is down nearly 95%; over the same period, the overall stock market — measured by the S&P 500 index — is up nearly 10%.

While Peloton may be looked at poorly due to “better” alternatives, many peloton owners believe it still has many convincing reasons why purchasing their bike or joining their app is worth the money.

”There are so many different classes to choose from, and there are even different intensity levels. You also do not have to commute and you get to work out in the comfort of your own home, which saves you valuable time, which I’ve realized that spending that extra time in the car is wasting time that we may take for granted. And you still get the opportunity to socialize and workout with a friend,” MPSH junior Ella Pelz said.

Since consumers turned to the gym as a more affordable option, Peloton has been experiencing a significant decline in sales. Bike, treadmill and subscription sales have fallen, leaving the company with a significant surplus of bikes and bike parts. Serious cost cuts through store closures and layoffs have prompted as a result of Peloton’s current financial crisis. For every dollar spent on a bike, Peloton loses a dollar, meaning that the profit earned by selling a bike erases from sales and marketing used in order to make that sale. Since its peak, the gross margin on hardware is down nearly 100%.

“I have a peloton and I never use it because a peloton doesn’t give the same amount of drive that the gym does since you are motivated by the whole social aspect of it,” MPSH junior Catalina Forwood said. “A Peloton is very pricey, so you’re not only paying for the bike, but you also have to do the monthly membership as well.” 

Due to inflation putting many people in financial difficulties, purchasing a peloton is a luxury that not many can afford. 

Not only did equipment face a reduction in sales, but digital subscriber growth has also been stalling and total workout views are down 20%. In hopes of improving their financial earnings, Peloton is now partnering with Amazon to help the distribution of bikes. Amazon’s cut of earnings will eat into Peloton’s profits, but these sales will help them get rid of inventory. However, with their current financial status and overload in inventory, it seems that Peloton will have to stop production altogether.