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(CNBC)   The wheel is falling off Peloton   (cnbc.com) divider line
    More: Obvious, Fiscal year, Peloton CEO Barry McCarthy, Peloton's sixth consecutive quarter, Million, Cash flow, Income statement, fiscal fourth quarter, Churn rate  
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785 clicks; posted to Business » on 25 Aug 2022 at 9:37 AM (22 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



Voting Results (Smartest)
View Voting Results: Smartest and Funniest

 
2022-08-25 9:55:08 AM  
12 votes:
Six quarters of losses. How can that happen? They make a decent margin of riskless revenue off of the subscription services. Having over a billion dollars in inventory is frankly baffling in the age of JIT. You would think that seasonal changes in sales would be more easily adjusted for. The markup on their hardware is outrageous - so I have a hard time believing that they aren't getting a tremendous revenue stream from new sales regardless of inventory build-up.

That leaves wasteful advertising and excessive executive compensation / facilities as the cause of their losses.
 
2022-08-25 9:58:47 AM  
9 votes:

madgonad: That leaves wasteful advertising and excessive executive compensation / facilities as the cause of their losses.


They bought into their own bullsh*t and kept ramping up production (inventory) like their sales would NEVER go down.

Add in the treadmill thing and the end of the pandemic and you have a fad company going boom.

A smart CEO would have banked company money and planned for an eventual return to a niche market, which is what they are. But the majority of executives these day just want the quick cash and leave.
 
2022-08-25 10:18:31 AM  
7 votes:

madgonad: Six quarters of losses. How can that happen? They make a decent margin of riskless revenue off of the subscription services. Having over a billion dollars in inventory is frankly baffling in the age of JIT. You would think that seasonal changes in sales would be more easily adjusted for. The markup on their hardware is outrageous - so I have a hard time believing that they aren't getting a tremendous revenue stream from new sales regardless of inventory build-up.

That leaves wasteful advertising and excessive executive compensation / facilities as the cause of their losses.


When a company like that goes public, it's usually designed to fleece the rubes.  The plan is working to perfection.  Next the shares will be shorted to oblivion and the hedge funds will walk away with free money.
 
2022-08-25 10:35:46 AM  
7 votes:

NewportBarGuy: A smart CEO would have banked company money and planned for an eventual return to a niche market, which is what they are.


True. But then they would have been promptly shiatcanned by the board during the growth period for failing to maximize shareholder value every quarter. Because companies only exist in three month wide windows of time.
 
2022-08-25 10:15:26 AM  
6 votes:
You can get clothes hangers from Target for about tree fiddy.
 
2022-08-25 10:15:49 AM  
6 votes:

inglixthemad: They actually have a decent product, and people love spin classes, but I never thought it was enough to build a company around.


It was enough to build a small company around, but then they went and thought they were a big company.
 
2022-08-25 9:17:04 AM  
5 votes:
cdn.cnn.comView Full Size
 
2022-08-25 10:31:18 AM  
3 votes:
as the company grinds through its turnaround plan

Turnaround plan?  They have one business model - sell expensive exercise bikes that have no value unless users sign up for a recurring subscription.  Good luck tweaking that.
 
2022-08-25 12:11:22 PM  
3 votes:

Wave Of Anal Fury: Good to see that they're durable for the cost.  It would be pretty awful if they're that expensive and only last a short period of time.


Just as a reality check, for reference these also last forever.

bidnextdoorimages.s3.amazonaws.comView Full Size
 
2022-08-25 10:20:28 AM  
2 votes:

Wave Of Anal Fury: inglixthemad: They actually have a decent product, and people love spin classes, but I never thought it was enough to build a company around.

It was enough to build a small company around, but then they went and thought they were a big company.


Yeah, C19 did that to a lot of companies. Taking all those people who went to spin class at the gym and keeping them home...

For those who don't think that's a lot of people... spin classes in many gyms are so insanely popular you have to show up 30 minutes early. Yes, that fracking popular. My wife got a Peloton because she hated getting there (only) 15 minutes early because of a meeting, and not being able to take the class.
 
2022-08-25 10:23:11 AM  
2 votes:
Apparently their products are overpriced and their subscriptions are overpriced. Unless you really manage that well, like Apple, you can't keep it going.
 
2022-08-25 10:37:04 AM  
2 votes:

NewportBarGuy: madgonad: NewportBarGuy: madgonad: That leaves wasteful advertising and excessive executive compensation / facilities as the cause of their losses.

They bought into their own bullsh*t and kept ramping up production (inventory) like their sales would NEVER go down.

Add in the treadmill thing and the end of the pandemic and you have a fad company going boom.

A smart CEO would have banked company money and planned for an eventual return to a niche market, which is what they are. But the majority of executives these day just want the quick cash and leave.

I just checked their income statements.

It isn't just overproduction. Their cost of revenue (making / distributing) their products is about half of their problem. The other half is operating expenses. Their revenue has only taken a small hit (maybe 7%)

That is... that's... wow.

That is a f*cking horribly managed company.


Yup.  If you want a textbook case for activist shareholders pushing out management, Peloton would be near the top of that list.  They really do have a great product AND good margins yet somehow manage to lose money.  It's bizarre that their CEO hasn't been fired into the sun by revolting shareholders yet.
 
2022-08-25 9:02:18 AM  
1 vote:
There's nothing wrong with demanding constant growth and returns on investments from companies like this, shut up capitalism can hear you.
 
2022-08-25 10:16:30 AM  
1 vote:

NewportBarGuy: madgonad: That leaves wasteful advertising and excessive executive compensation / facilities as the cause of their losses.

They bought into their own bullsh*t and kept ramping up production (inventory) like their sales would NEVER go down.

Add in the treadmill thing and the end of the pandemic and you have a fad company going boom.

A smart CEO would have banked company money and planned for an eventual return to a niche market, which is what they are. But the majority of executives these day just want the quick cash and leave.


I just checked their income statements.

It isn't just overproduction. Their cost of revenue (making / distributing) their products is about half of their problem. The other half is operating expenses. Their revenue has only taken a small hit (maybe 7%)
 
2022-08-25 10:31:26 AM  
1 vote:

madgonad: NewportBarGuy: madgonad: That leaves wasteful advertising and excessive executive compensation / facilities as the cause of their losses.

They bought into their own bullsh*t and kept ramping up production (inventory) like their sales would NEVER go down.

Add in the treadmill thing and the end of the pandemic and you have a fad company going boom.

A smart CEO would have banked company money and planned for an eventual return to a niche market, which is what they are. But the majority of executives these day just want the quick cash and leave.

I just checked their income statements.

It isn't just overproduction. Their cost of revenue (making / distributing) their products is about half of their problem. The other half is operating expenses. Their revenue has only taken a small hit (maybe 7%)


That is... that's... wow.

That is a f*cking horribly managed company.
 
2022-08-25 10:35:59 AM  
1 vote:

inglixthemad: For those who don't think that's a lot of people... spin classes in many gyms are so insanely popular you have to show up 30 minutes early. Yes, that fracking popular. My wife got a Peloton because she hated getting there (only) 15 minutes early because of a meeting, and not being able to take the class.


That's nuts.  I've gone through a number of stationary bikes through the years (five of them), and when I added up the total cost once, it amounted to half of a single Peloton at its original price.
 
2022-08-25 10:46:17 AM  
1 vote:

OptionC: NewportBarGuy: madgonad: NewportBarGuy: madgonad: That leaves wasteful advertising and excessive executive compensation / facilities as the cause of their losses.

They bought into their own bullsh*t and kept ramping up production (inventory) like their sales would NEVER go down.

Add in the treadmill thing and the end of the pandemic and you have a fad company going boom.

A smart CEO would have banked company money and planned for an eventual return to a niche market, which is what they are. But the majority of executives these day just want the quick cash and leave.

I just checked their income statements.

It isn't just overproduction. Their cost of revenue (making / distributing) their products is about half of their problem. The other half is operating expenses. Their revenue has only taken a small hit (maybe 7%)

That is... that's... wow.

That is a f*cking horribly managed company.

Yup.  If you want a textbook case for activist shareholders pushing out management, Peloton would be near the top of that list.  They really do have a great product AND good margins yet somehow manage to lose money.  It's bizarre that their CEO hasn't been fired into the sun by revolting shareholders yet.


The Founder left at the beginning of the year. The new CEO inherited this mess. He wants to focus on the service, so expect a quality drop since their new product lines are made by third parties.
 
2022-08-25 10:48:01 AM  
1 vote:
Peloton is like Uber. They have a lot of people paying a subscription and that subscription practically cannot lose money as long as the they are smart about it. (Similarly if Uber simply focused on taking their 30% cut of every ride, and maintaining the app, they'd have almost no way to lose money - their losses as because of everything else). Peloton's losses are because of massive overextension that made no sense (COVID was *going to end* at some point) except as a sacrifice to the "We MUST grow no matter what!" Wall Street dream, when they could be sitting back and raking in monthly subscriptions indefinitely. They also have a bunch of classes as part of their subscription that likely cost them money but bring almost no revenue in terms of additional subscribers (how many people use Peloton Meditation?), that factors into that overextension.

Even without the treadmill issue, if they were willing to simply accept steady and consistent profits, they'd be profitable forever. But Wall Street demands infinite growth, and doesn't accept the possibility of market saturation, and thus Peloton is where it is.
 
2022-08-25 11:36:36 AM  
1 vote:

Wave Of Anal Fury: Benevolent Misanthrope: Wave Of Anal Fury: inglixthemad: For those who don't think that's a lot of people... spin classes in many gyms are so insanely popular you have to show up 30 minutes early. Yes, that fracking popular. My wife got a Peloton because she hated getting there (only) 15 minutes early because of a meeting, and not being able to take the class.

That's nuts.  I've gone through a number of stationary bikes through the years (five of them), and when I added up the total cost once, it amounted to half of a single Peloton at its original price.

This assumes that a) Pelotons last forever and b) the subscription is free.  Neither of which is true.

I know the sub isn't free.  I've wondered, though, how durable they are.  My first bike, the most expensive at around $700, lasted around 9 years, I think.  I've cheaped out on the others, though, so I've only gotten a couple years out of each of them.


My wife rides her Peloton about every day averaged out. The bike is at least seven years old, and no issues of durability. We are obsessive about taking care of our stuff.
 
2022-08-25 11:40:56 AM  
1 vote:
Fark user imageView Full Size
 
2022-08-25 11:42:37 AM  
1 vote:

Wave Of Anal Fury: I know the sub isn't free.  I've wondered, though, how durable they are.  My first bike, the most expensive at around $700, lasted around 9 years, I think.  I've cheaped out on the others, though, so I've only gotten a couple years out of each of them.


We have one and based on my own observations they're built pretty solidly.  And from what I recall in our pre-purchase research, the build quality was rated pretty highly compared to other higher end models, including commercial ones.  Of course ultimately we'll have to wait and see.

I think the service is pretty great.  I still like going outside for rides, runs, or hikes when I can and the weather allows, but the Peloton has been pretty great with how my (and the kids) schedule has changed since Covid.

That said, I still can't grasp how they didn't see the obvious reduction of growth as things opened back up and people went back to their old routines.
 
2022-08-25 11:44:09 AM  
1 vote:
Good to see that they're durable for the cost.  It would be pretty awful if they're that expensive and only last a short period of time.
 
2022-08-25 2:30:19 PM  
1 vote:

What in The: I bought a ProForm elliptical last year based on reviews. It came with a free one-year subscription to iFit. Large range of workouts that encourage while taking you on runs through Taiwan, D.R., Romania. I highly recommend this service over Peloton's screaming.


I have a NordicTrack treadmill. I buy my iFit membership around Black Friday, so it's usually 40% off. People can also get cheap codes off eBay, I've heard. I enjoy it more than Peloton, just because watching someone run in a studio is boring, but running around different countries and locations is much more interesting. Not to mention the changing speed and incline, make it more immersive than watching someone in a studio. I know some people are all about the music, and that's cool for them. Just not usually something that motivates me.

I have used Peloton for yoga and strength, but thinking about cancelling more and more.
 
2022-08-25 10:20:34 PM  
1 vote:

Joey Jo Jo Jr Shabadu: LineNoise: Like i said, i can't speak for whatever the current models are, but the one i got almost 3 years ago is a tank.

The actual bike is pretty much the same between the 2 models they offer.  All of the "upgrades" are mostly technology related.  Bigger screen, which also rotates 180 degrees for non-bike workouts. Newer processor, more ram, yadda yadda.  Better sound and camera.  Most of the improvement is in the screen.  It also offers Apple Gymkit connectivity, and automated resistance adjustments.  So while the upgrades are nice, they're hard to justify another $1k for.


The Bike+ has an actual power meter instead of inferring power from cadence and resistance and assuming some level of calibration for both.  If you're into road cycling, this is huge.  If not, meh.
 
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