Dec 14, 2021 - Economy

The rise and fall of Peloton

Data: FactSet; Chart: Axios Visuals

The pandemic was fantastic for Peloton — at first.

Driving the news: Over the two years since the at-home fitness company's IPO, revenues have more than quadrupled, from $1 billion to $4 billion. The company was also a poster child for pandemic-era share prices going parabolic, with the stock rising 760% between mid-March 2020 and mid-January 2021. Then, it plunged.

Why it matters: Peloton's share price peaked during the meme-stock frenzy of January 2021.

  • The company has had a string of bad news since then, including the recall of its treadmill; supply-chain problems; a greater-than-expected pent-up desire to get out of the house again after the vaccine arrived; and, now, a major HBO character being killed off by exercise bike in a premium cable premiere.

By the numbers: The share price is down almost 80% from its highs, and although it's still almost double its pre-pandemic level, the stock is trading at significantly lower multiples than when it went public.

Flashback: Peloton's IPO valuation of $8.1 billion worked out to 7.9 times trailing revenues.

  • That ratio rose to as much as 16.7 at the market peak in January; it's now just 3.2.

The big picture: Some of Peloton's fall is due to very real weakness in its fundamentals. But a lot of it is simply a function of the way in which meme stocks can rise just because they're rising, creating an air bubble under the share price and the potential for massive drops.

The bottom line: Peloton is still a $13 billion company — a great achievement for a firm that's less than 10 years old. Last year's meme-stock mania, however, makes it look like a massive disappointment.

Go deeper