Friday Jan 5 2024 14:23
4 min
1. Exclusive content deal with TikTok drives Peloton share price rally
2. Peloton rebranding: Company shifting to software-based model as demand for bikes falls
3. Peloton financials: Fitness firm yet to turn a profit from its existing member base
4. Peloton share price forecast: Analysts maintain consensus Hold rating
Fitness equipment manufacturer Peloton Interactive is set to bring its workout content to the short-form video platform TikTok in an exclusive deal, as announced by the companies on Thursday.
The partnership emerges as Peloton, experiencing a 6% gain in premarket trading, shifts its focus from hardware to becoming a software-focused company, leveraging its exclusive content to propel subscriber growth.
The demand for Peloton's connected home fitness equipment has dwindled after a surge during the Covid-19 pandemic, exacerbated by costly bike recalls, delaying a return to positive cash flow until fiscal 2023.
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To enhance accessibility, the New York-based company is rebranding itself, introducing new plans enabling subscribers to engage in workouts with or without equipment.
Peloton will create a dedicated hub on TikTok, labeled #TikTokFitness Powered by Peloton, marking its first external partnership beyond its owned channels. The hub will feature live Peloton classes, content from Peloton's instructors, celebrity collaborations, and more, the companies said on Thursday.
Oli Snoddy, Peloton’s vice president of consumer marketing, expanded on the deal in a recent interview with CNBC:
“On the one hand, there’s a longer-term goal around changing perceptions around who Peloton is for to multiple different types of audiences and I think one of the real strengths of TikTok … is that it increasingly reaches everyone, including the younger audience”.
In the short term, the deal will seek to build on what Peloton says has been a successful relaunch by boosting metrics such as app downloads and conversions, Snoddy said, adding:
“We know that when people experience Peloton, they really get it, they fall in love. This is really about taking the instructors and the content we have and kind of dimensionalizing it to a broader audience on TikTok.“
In the quarter ending September 30, Peloton lost 30,000 members, while revenue declined to $595.5 million — a drop from the $757.9 million reported three years earlier during the peak of the pandemic.
Peloton CEO Barry McCarthy, who assumed his role in February 2022, succeeding co-founder John Foley, has been working to streamline the business for sustainable growth and profitability. His focus has been on increasing Peloton's subscriber count and creating new avenues for accessing Peloton equipment, including a rental service and refurbished options.
Despite early signs of progress from these initiatives, Peloton has yet to turn a profit from its existing member base, which makes partnerships with companies like TikTok and athletic apparel retailer Lululemon crucial for Peloton's long-term success.
In November last year, the company projected revenue below estimates for the crucial holiday quarter and reported a larger-than-expected quarterly loss.
Peloton shares, which trade on the Nasdaq exchange under the ticker PTON, were up over 6% in premarket trading on Friday at $6.50. The stock has fallen by over 30% over the past year, despite showing growth of 20% over the last three months.
According to 17 analysts surveyed by TipRanks that offered 12-month Peloton share price targets, the consensus forecast for PTON stock last stood at $7.28 — a potential 20.39% upside from its current price as of January 5, 2024.
The highest listed Peloton share price forecast on the platform was $20.00, while the lowest was listed at $4.00. Of the 17 analysts surveyed, 4 rated PTON stock a Buy, 12 rated it a Hold, while one analyst maintained a Sell rating.
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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