Peloton’s aggressive panorama stays powerful

© Reuters Peloton (PTON) competitive landscape remains tough – Morgan Stanley

By Sam Boughedda

Morgan Stanley said in a note to clients Wednesday that the future of fitness is hybrid and Peloton’s (NASDAQ:) competitive landscape remains tough.

One analyst explained that the company’s new AlphaWise survey examined fitness trends versus home fitness equipment, and with only 21% of home equipment both connected and subscribed, it still sees opportunity for market share to win for connected fitness. However, they added that digital is likely a less attractive opportunity for Peloton “given the fractional share and low barriers to entry.”

Troubled fitness equipment maker Peloton has seen demand slump since the end of the pandemic. As a result, its shares are down 88.5% over the past 12 months and another 4% on Wednesday.

“Fitness at home is the most popular form of exercise, with ~50% of Americans already exercising at home…but at the expense of ~25% of non-equipment exercise bikes who workout 3x or less/month versus only 8% of gym members” , the analyst explained, “Contrary to popular belief, digital/connected fitness appears to be an adjunct to gym usage…not a replacement: The PTON thesis has often been based on the assumption that connected gym members would withdraw. However, our survey data shows one very different story – compared to others, gym members are about 3x more likely to subscribe to a connected bike and about 4x more likely to subscribe to a connected treadmill.”

“With a 13% share of home bikes, PTON has quickly become the industry leader despite the premium price point…however, the space remains competitive with five other players scoring >5% share. In treadmills, PTON has quickly grown to #2, well ahead of other connected fitness startups like Echelon. More notably, PTON has a dominant share in Gen Z (~23%/~26% in bikes/treadmills), which it positioned to potentially gain further market share as cohort ages into their prime years of spending,” the analyst added.

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