The Peloton in the Room

Peloton share price graph

See that cliff-dive there yesterday, that drop from $86 to $56? That’s what happened when investors learned that Peloton Interactive Inc. has now sold just about all the exercise bikes it’s really going to sell.

Capitalism despises this outcome. Making a high-quality good then calling it a day? No bueno, say the money-masters.

Similarly, lowering prices/democratizing the product is no answer — Adam Smith notwithstanding. Here’s CNN Business:

Peloton’s move to slash the price its lower-end bike by 20% to $1,495 in August was also a disappointment. “While the price drop led to conversion rates that exceeded our forecast, overall traffic has not met our initial expectations,” admitted Woodworth.

Analysts at Stifel Financial (SF) have slightly soured on Peloton’s future, writing in a note Friday that the firm expects it will take “several quarters to determine a more normalized pace of growth, or more skeptically, whether or not the revised outlook is an indication that the core product may be closer to maturity in existing markets than previously thought.”

CNN Business, 5 Nov 2021
elephant photo

Our prevailing socio-economic order still rests on finding and lavishly promoting ways of avoiding sufficiency, product longevity, and price-cutting. In the year 2021.

This is something to think about.

%d bloggers like this: