Peloton Can't Seem to Climb

Peloton Interactive can't catch a break. Shares on Tuesday extended their year-to-date skid to nearly 77%.

The stock fell 4.3% to close at $35.13, its lowest close since May 2020. The drop followed a Monday evening note from Raymond James analyst Aaron Kessler. I write about it here:

Curious whether Peloton demand this holiday season has spiked, Raymond James analyst Aaron Kessler took a look at Google search data. Based on softer-than-expected trends, Kessler believes the company’s outlook for 308,000 to 358,000 net added connected fitness subscribers in the December quarter may be too aggressive.

“Historically, Google Search Trends data has correlated well with Peloton hardware sales,” Kessler wrote in a note. “Based on our updated analysis, the search trends data indicates continued softening of demand for Peloton sales in the December quarter.”

U.S. search trends were down 30% year over year so far in the December quarter, compared to a 31% decline in the September quarter. U.K. searches slowed 40% year over year, while Germany searches were down 58%. One bright sign was Australia, where searches were up 213% year over year from a low base last year.

Last month, the company's September quarter earnings report and outlook for the coming quarter signaled weakness amid the reopening. Analysts cut expectations for shares, as it become more clear pandemic-driven demand was a thing of the past.

It's not just tough comparisons from 2020 lockdowns. Shares fell earlier this month after an unfortunate product placement in the Sex and the City reboot. In the first episode of the show, called And Just Like That..., Chris Noth's Mr. Big character suffers a heart attack and dies after a Peloton ride.

Though Peloton attempted to play along with the a commercial featuring Noth that insinuated the character survived, that spot was canned after The Hollywood Reporter published allegations from two woman who said they were sexually assaulted by the actor. Noth denied the allegations.

The episode called to mind 2019's infamous "Peloton Wife" advertisement. The holiday season spot was widely mocked online after users posted screenshots of the lead actress, who played a wife who received a Peloton for the holidays. Her facial expressions displayed discomfort about the Peloton. 

Peloton shouldn't count on a surge in demand this time around.