You may have noticed membership price hikes, seen Peloton Studios close down, read stories about product recalls, or generally got the impression that Peloton is in trouble.
Is this a load of hot air, or is Peloton going out of business?
In short, no – as it stands at the time of writing, Peloton doesn’t appear to be in any immediate danger of going out of business, although that doesn’t mean Peloton is completely in the clear either.
While we’ve gradually moved away from the quarantine home cycling class and back to cycling out on the road, it hasn’t been smooth sailing for the company.
You’re probably wondering what the future looks like for Peloton – and what happens to all those content-reliant Peloton bikes if the worst happens.
Well, read on, because we’re going to go over the problems the company has faced which have left people asking if Peloton is going out of business, as well as what the future looks like for the company, and what that means for your Peloton bike.
The Bad News For Peloton
Peloton’s stratospheric rise from a fitness startup to one of the biggest fitness brands in the world is now skirting dangerously close to a classic boom and bust story.
And it’s certainly true that the 2020-2021 high the company experienced as it rapidly expanded has now been counterbalanced by a run of bad news in the last couple of years.
During the pandemic in 2020, Peloton experienced astronomic growth, their bike sales and subscriber numbers rocketed up and their stock price went to the moon as beginners and seasoned cyclists alike looked to stay trim from isolation.
For those of us locked up during the pandemic home spin classes like Peloton were one of the most effective ways to get the heart rate up from home.
But all bubbles burst, and dark clouds were spotted on Peloton’s horizon in 2021.
During their rapid expansion, Peloton had scrambled to meet the huge demand for their product by embarking on a spending and hiring spree, getting Peloton Bikes into homes at any cost.
However, around the moment they caught up to this demand, the worldwide vaccine rollout was steadily encouraging gyms to reopen and cyclists to dust off their gear and get out on the road.
Explosive growth had encouraged the company to splash the cash on expensive, scattergun marketing strategies and establish costly supply chains during the pandemic. By 2021, it was clear this wouldn’t pay off.
Around the time the company’s strategic missteps began to come to light, Peloton was also forced to issue an embarrassing recall of the controversial Peloton Tread+ treadmill, due to serious safety concerns.
Peloton – which had been Wall Street’s golden goose just a short year before – entered a downward spiral, accruing $2.83 billion in losses by July 2022.
It was around this time people began to seriously ask themselves: “Will Peloton go out of business?”
What followed was a panicked response by Peloton, which was now showing many of the signs of a company in a death spiral.
Throughout 2022, over 4500 employees were laid off in waves, Peloton stores were closed, they began outsourcing the manufacturing of their bikes, and the app’s monthly membership fee was hiked.
As well as these urgent steps to rebalance the cash going in and out of the company, there were leadership changes at the senior level.
In September 2022, Peloton CEO John Foley resigned, and the company made some serious course corrections.
By 2023 the worst was behind them, but Peloton is hardly in the clear. After another recall, this time of a run of Peloton Bikes, the company’s stock price hit an all-time low in May 2023.
The perception seems to be that Peloton is a has-been, that their moment has come and gone, and that another company will soon come in to occupy the space they once dominated.
However, it’s not all bad news for Peloton…
The Good News For Peloton
After Foley’s exit in September 2022, Barry McCarthy took over as President and CEO of Peloton with a mission to turn the company around.
When you think of Peloton you probably picture the home exercise bike, once the company’s unique selling point. However, the picture is incomplete without the accompanying app which users subscribe to monthly for classes and challenges.
New CEO Barry McCarthy sees Peloton’s future as a fitness app first, and a retailer for home exercise equipment second.
McCarthy had previously spent almost ten years at Spotify, and under his watch, Peloton has turned its focus away from selling workout equipment and more fully onto building revenue through its base of subscribers.
And this could be a promising strategy. While the delivery of Peloton Bikes into homes was tumultuous at times, with delivery wait times occasionally stretching into months, the app has been a popular service for users and a reliable revenue stream for Peloton.
Though the explosive trajectory of the early 2020 to late 2021 explosion has slowed, Peloton has consistently grown its subscriber numbers since 2019, even during its tumultuous years.
Under McCarthy, subscription revenue has overtaken that from sales of fitness products and all signs indicate Peloton has a future as a fitness app.
It’s true that this is a step away from its original founding vision of bringing the high-end studio cycling class to people’s homes with branded equipment.
But this looks to be the most viable way forward for the company, after the dust has settled from the Peloton Bike boom and bust the company remains a high-value fitness IP that has developed a good product for a loyal user base.
It’s important to note that Peloton is still selling Peloton Bikes. They remain part of the company’s offering, and there is no indication that they plan on reducing services down to just the app.
We don’t know how exactly successful this new direction will be, but we can make some predictions about Peloton’s future.
Is Peloton Going Out Of Business?
The short answer is no; Peloton is not going out of business.
The company has weathered some serious trouble in the last few years, but there is no reason to think bankruptcy is imminent for Peloton.
So what does that mean for Peloton owners?
The good news is that Peloton’s classes, programs, and challenges will not end. There’s no need to worry about Peloton Bike becoming a $3000 towel rack.
If you enjoy the streamed online classes Peloton offers, you needn’t worry.
It’s now apparent that Peloton is shifting its focus primarily onto their app, and staying ahead of the competition requires that they maintain high quality for their subscribers.
Peloton is a long way from bankruptcy, and if things take another turn for the worse they’d likely be acquired by another company looking to get in on their subscribers’ fees.
There is simply too much money on the table for Peloton’s online services to end and the line to go dead. So, cyclists need not worry about Peloton Bikes becoming redundant any time soon.
Is it still worth Buying A Peloton Bike?
If you think the home cycling studio class is for you and you’re interested in a Peloton Bike, don’t be deterred by the news.
And if you love the classes but balk at the price tag of the home bike, remember you can subscribe to the Peloton app and participate in the classes on any home exercise bike.
A Peloton App Digital membership, ($12.99 at the time of writing), or the full Peloton membership plan allows you to take classes without a branded Peloton Bike.
With the app set up on your phone or tablet, you can follow along with classes, and by adding a cadence sensor to your set up get an approximation of the data provided on speed and cadence by a Peloton bike.
Without the Peloton Bike, you will, however, not be able to compete in the classes you take or have access to the full Peloton dashboard which gives you performance data.
Resistance is also a sticking point, as you’ll have to modulate your resistance yourself, as the instructor’s cues are given specifically for a Peloton Bike.
Whether you use the app alone or go for the full Peloton experience is up to you, either way, take your mind off the headlines, don’t get bogged down in stock market numbers, and keep your feet moving!