Fallen fitness unicorn Peloton faces a harsh truth despite its shiny new deal with Hyatt hotels: I don’t think they thought [about] what would happen after the pandemic

The company announced Wednesday that it plans to partner with Hyatt to place its equipment in more than 800 hotel locations in the US, Canada, UK, Germany, Austria and Australia, and members of the Hyatt Rewards program earn points for use the equipment About half of the locations will have TVs in guest rooms with Pelotons fitness content.

The announcement comes a day before Peloton’s first-quarter earnings report, where the company is expected to post a 3.75% sales loss. Neil Saunders, managing director of GlobalDatas’ retail division, said the fortune the partnership could help increase exposure to Peloton, but likely won’t translate into new sales. The company reported $743.6 million in sales in 2023, down from $792.7 million a year earlier, but expects to return to revenue growth in June.

The products are very expensive, Saunders said. Many consumers who want them already have them, so they are not in the market to buy new Peloton products. A Peloton bike costs $1,445 and the Bike+ costs $2,495, even cheaper than the $2,995 Peloton Row.

These deals and partnerships are helpful for Peloton, but they don’t really change the company’s fundamental trajectory, he added.

The partnership with Hyatt is one of several strategies Peloton has employed to rekindle the company’s stagnant growth. In addition to a similar partnership with 5,400 Hilton hotels across the U.S., Peloton relies on retail partners like Dicks Sporting Goods and Amazon to sell its products, taking pressure off its failing brick-and-mortar showrooms. Last month, it quietly dissolved the free subscription to its app less than a year after its introduction after failing to get paid subscribers.

The fall of the pelotons has been almost as rapid as their rise. At its peak in January 2021, Peloton’s market capitalization rose to $45 billion as the lockdown forced people to seek virtual group cycling lessons. It has since lost 90% of its value to around $1.14 billion as it barely clings to the unicorn status it achieved after a 2017 funding round valued it at 1.25 billion dollars. The company’s stock has hit penny stock status at $3.11 per share, a fraction of its IPO price of $29.

Peloton did not respond the fortunerequest for comments.

An unfriendly market

Peloton, founded in 2012 as a fitness equipment company with an interactive platform, took off during the pandemic thanks to closed gyms and remote working. It had a 172% sales blitz in the first six months of 2020, with revenue of $1.82 billion that year, and doubled that to $4 billion a year later. But according to Jessica Ramrez, senior retail research analyst at investment firm Jane Hali & Associates, Peloton didn’t know what to do with its rapid success.

I don’t think they thought [about] what would happen after the pandemic, Ramrez said the fortune. When you grow a company, you always have to think about the future because the consumer will change. The consumer is constantly changing.

The company’s hurdles also included a series of controversies, including Sex and the City star Chris Noth appearing in a 2021 sexual assault film, which forced the company to withdraw the campaign. Peloton recalled its Tread Plus treadmill that same year after it was implicated in the death of a child. Co-founder John Foley stepped down as CEO in 2022, after rumors that he was unable to accurately forecast the market or act on product recalls. His successor Barry McCarthy laid off thousands of employees and outsourced operations to third parties in an attempt to return the company to profitability.

Even on the other side of the pandemic, the scandal and the corporate restructuring, Ramrez is not convinced that the market is friendly to Peloton.

I think Peloton is a tough sell in today’s environment, just because the consumer lives their day-to-day lives, he said.

Reduced remote work opportunities not only mean fewer reasons to exercise at home, but those who continue to work from home want to get out of the house and find community in fitness environments, especially outdoor activities like running. Running app Strava reached 100 million users in July 2023, doubling its base in just two years. Nikes app users are over 500 million. Not only is running more popular, but it’s also cheaper, Ramrez said, so you’ll be down to just one pair of sneakers.

Putting the pieces of its recent past together doesn’t mean success: I don’t think the trajectory looks very good for Peloton, to be honest, Saunders said. I see them as a company that will continue to shrink, that will continue to have to make very difficult restructuring decisions, and as a company that will remain with little or no profit for the foreseeable future.

Redefining success

Despite Peloton’s fair share of problems, Simeon Siegel, managing director and senior retail analyst at BMO Capital, isn’t ready to call the company a failure. Too often shareholders and consumers pass judgment on companies based solely on high initial expectations.

We judge them relatively, he said the fortune. In relation to what this business has promised, [Peloton] it was a clear disappointment. To businessit has been a success story.

Not many fitness companies can create a compelling product and have 3 million subscribers, Siegel argued. Analysts agreed that Peloton has good products and consistent consumer loyalty. Peloton will only be a failed business in Siegel’s eyes if it doesn’t lean into that loyal following and continues to chase growth that isn’t there.

It has an underlying business that makes a lot of money, he said. Most struggling companies can’t tell.