Peloton Company Profile

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Peloton Company Profile

Peloton shows strengths in customer satisfaction, digital engagement, classes, and subscription services, however, the company has gotten a lot of press for weaknesses in accounting, marketing, and music licensing. Peloton participates in several strategic partnerships including partnerships with financial institutes, digital companies, fitness companies, musicians and music platforms, and grassroots partners. Details of our findings have been provided below.

SWOT Analysis

Strengths

  • Customer satisfaction is one of the company's biggest strengths with 97% customer satisfaction according to James Hardiman, a Wedbush analyst.
  • The company also speaks highly of their ability to digitally engage within communities.
  • Peloton has several subscription offerings through apps and software services that begin at $12.99 per month which offsets the initial cost of the equipment itself with the competitive subscription pricing.
  • Additional strengths include instructors and the availability of classes.

Weaknesses

  • According to company experts, the company has acknowledged weaknesses in marketing and branding that it is aware needs to be addressed. These weaknesses include past branding that referred to the company in religious-minded terms such as “Religion,” “cultish,” and “preachy.” In addition, the company has made questionable advertising formats such as a TV advertisement released on December 2, 2019, that depicted a young woman making a video diary of her use of their products. As a result, experts say that the company's advertising leads to more questions than answers about their products.
  • The company has also admitted in their SEC filings that they have a weakness in the accounting department with a lack of control over “information technology general controls, controls to address segregation of certain accounting duties, timely reconciliation and analysis of certain key accounts and the review of journal entries.”
  • The company also acknowledged risk factors that have become apparent in terms of licensing music that is played for the customers, however, the company stated "Unlike music streaming services, where having an exhaustive music catalog is vital to be able to compete for customers, we have control over what music we select for our classes. As a result, we expect to be able to manage music expense such that, over time, these fees as a percentage of subscription revenue will flatten, or even decrease."
  • During our analysis, we also found several mentions of internal "leaks" in the marketing department and product launches which could be considered a weakness.

Opportunities

  • The company's low subscription costs offer monetization opportunities within the services. The company stated, "today’s announcements represent an acceleration in that digital strategy relative to our expectations, expanding access to Peloton content at the top of the funnel, increasing conversion opportunities for the connected fitness business, growing the reach of the Peloton brand, and building a large digital-only ecosystem."
  • Additional growth opportunities include growth into foreign markets, growth for the hospitality industry, and expansion in the product line. According to the company, one of the biggest opportunities in foreign markets is in the Canadian market.

Threats

  • The company claims that their only legitimate threat is a company called SoulCycle which has hinted at launching a similar offering of their own.
  • In the 2020 annual report, the company stated "We have limited control over our suppliers, contract manufacturers, and logistics partners, which may subject us to significant risks, including the potential inability to produce or obtain quality products and services on a timely basis or in sufficient quantity."

Expert Opinions

  • Peloton has shown positive growth potential due to increased demand during the COVID-19 pandemic as well as the launch of new products with upgraded capabilities and stylized product design.
  • On September 12, 2020, the company saw a 3% increase in stock priced following the quarterly announcement of revenue growth and the new product announcement for Bike+ and Tread+.
  • Experts say that offering lower-priced Treads could lead to gross margins for connected fitness products to compress in the future.
  • According to MarketWatch, 19 of 26 analysts tracked by FactSet that cover Peloton’s stock upped their price targets on Peloton’s stock following the release of the quarterly report in September.

Partnerships

Current Partners

Mergers and Acquisitions

  • In June 2018, the company acquired Neurotic Media, which focuses on a music platform for curated playlists during live classes.
  • In October 2019, The company acquired Tonic, which was previously a manufacturing partner.
  • On November 5, 2019, the company acquired Gossamer Engineering.

Partnership Program

  • After scouring the company website, SEC filings, expert reports, and news and media publications, we were unable to find any mention of a partnership or affiliate program. The only way to partner with the company is to contact them by emailing partnerships@onepeloton.com with inquiries.

In The News

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