Peloton Has A Great Problem On Their Hands

Peloton has definitely been a winner during COVID as gyms continue to go bankrupted gyms or remain closed and as people created gyms in their homes. As a result, Peloton’s revenue continues to increase quarter over quarter as more people purchased its fitness equipment and tune into its live classes.

But Peloton has a problem…they can’t keep up with demand. So in December, Peloton bought Finland’s Precor for $420 million to increase their manufacturing capacity. In an instant, Peloton added 625,000 square feet of domestic manufacturing space as well as a team of about 100 research and development employees.
This past week, Peloton announced earnings. Although Peloton hit $1 billion in sales in the quarte an increased revenue to hit $4 billion, Peloton plans to invest over $100 million in air and ocean freight to shorten delivery windows…which upset Investors.

The stock today seems to be reacting to the consequences related to how the company plans to address delivery delays. Peloton will be "incrementally investing over $100 million in air freight and expedited ocean freight over the next six months in order to improve our order-to-delivery windows," the company said in a statement. It will also delay the launch of its new treadmill product in the U.S.
The product delivery delays come even as Peloton said it has "significantly increased Bike and Bike+ production over the last several months." The company said in its earnings call it will focus on addressing its delivery issues, and delay the launch of its new treadmill by approximately two months in the U.S.

Video Source:https://www.youtube.com/c/YahooFinance/videos

The company’s continued investments in the supply chain are impeding the top line growth and profitability, but the chart suggests as long as the demand remains, to buy price at the daily demand at $135.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.