Specialist
Former senior manager at Peloton Interactive Inc
Agenda
- 2022 connected fitness industry outlook
- At-home fitness vs gym demand trends – continued customer focus on at-home fitness despite gyms re-opening
- Competitive landscape focusing on Peloton’s (NASDAQ: PTON) outlook vs players such as Tonal and Amazon’s (NASDAQ: AMZN) wearables foray
Questions
1.
Could you share your 2022 outlook for the fitness industry?
2.
Do you have an estimate for the TAM for home fitness?
3.
What are your growth expectations for the next 3-5 years?
4.
What under-penetrated domestic or international markets do you believe still have significant room for growth?
5.
Do you have any estimates or expectations on the level of growth or decline for at-home fitness sales during the 2021 holiday season relative to either 2019 or 2020?
6.
How similar or different could demand be for fitness subscriptions – gyms and at-home fitness – for the 2022 New Year’s resolution crowd this January? Are signs pointing to an uptick or drop-off in fitness demand in general vs in prior post-New Year’s periods?
7.
What are your thoughts on the recent CNBC report pointing to a potential production halt for two months due to demand weakness at Peloton? How far do you think this might be from a potential action Peloton management would take?
8.
What proxies would suggest demand weakness and might have triggered Peloton to potentially halt production for two months?
9.
A report I read pointed to bike sales correlating well with traffic to Peloton’s website. It seems the number of visits to its site in Q4 2021 dropped 5% YoY, but had an increase of 6% in traffic QoQ. How do we interpret this specific metric and what could it mean for bike sales and Q4 2021?
10.
You mentioned second-hand markets such as Craigslist and eBay, and this would include Facebook Marketplace as well. If we consider the individuals that are potentially shopping bikes in the second-hand market, wouldn’t that crowd also be curious to learn about subscription cost if they committed to purchasing the Peloton bike?
11.
Peloton introduced a fee for the delivery and set-up of equipment. Typically, it’s USD 250 for a bike and USD 350 for a treadmill. How would you frame the risk of reduced demand given the introduction of this fee? Would there be a drop-off in net adds or significant pushback by consumers such that Peloton might pull this fee?
12.
What does discounting potentially mean as a benchmark for demand? In August 2021, Peloton decided to trim the price of its original bike by about 20%, and offered discounts on its Bike+ and some Tread products to close out the year. What do you make of this?
13.
Can you give us your outlook on CAC [customer acquisition cost] and your expectations around Peloton CAC to either keep directionally rising or potentially falling?
14.
What sort of rift is there to CAC when we also consider the amount of entrants in the sector?
15.
How flexible of a supply chain do you think Peloton is operating? Can it pivot production into manufacturing other goods, potentially those unrelated to its core?
16.
Peloton’s April 2021 acquisition of Precor was intended to address a shortcoming on the supply front. What scenarios would you envision for that operation specifically, aside from being able to pivot to production outside of its core? Is there any reason to believe it could potentially be divested, given some of the potential production halt?
17.
What is the potential for Peloton to focus on bringing Precor back to its roots in manufacturing commercial equipment again? In a previous Forum Interview on Tonal [see Tonal – Fitness Equipment Technology Positioning – 17 March 2021], product wear and tear in commercial settings was considered to be a risk for at-home product manufacturers aiming to pivot to commercial.
18.
Could you share your thoughts on the subscription ecosystem, including how sticky you believe it is today vs mid-pandemic when gyms were closed?
19.
How much of a risk is there in consumers potentially churning from Peloton’s platform, not only given the easing of mandates on gyms but also with the rise of platforms such as Apple Fitness+? Is there anything that we could draw from the scenario where people that were Netflix subscribers were then presented additional subscriptions such as Apple TV+? Can all these fitness subscriptions coexist?
20.
What are your thoughts on the broader competitive landscape? Who or what do you believe is Peloton’s biggest competitive threat at the moment?
21.
You mentioned Tonal making some headway. Can you expand on that a bit more? Can Tonal and Peloton coexist?
22.
Where does Amazon fall in the stack here? Any thoughts on its Halo offering, which mainly competes in the wearables ecosystem? Do you find that to be a threat at all to Peloton?
23.
What are your thoughts on recent headlines pointing to Peloton’s app being leveraged by Schwinn bike users? How prevalent of a trend do you think this is?