Peloton’s Ongoing Death Spiral, Sizing up the Digital Fitness Opportunity

Hello everyone. We are getting to the last few CY2Q23 earnings reports. Today’s focus: Peloton. After going over the key numbers from the quarter, we look at the broader market opportunity found with digital fitness. Let’s jump right in.

Peloton’s Ongoing Death Spiral

For the past two years, we have been closely following Peloton’s implosion. Early red flags appeared in the company’s Form S-1 filing (IPO). Jump ahead two years and growth metrics began to deteriorate when the company should have been seeing explosive growth figures.

The Peloton story eventually shifted from being a possible Apple Fitness+ competitor to offering another look into the still young digital fitness space.

Back in May, Peloton unveiled a branding pivot to focus on accessibility (to appeal to more users). New membership tiers for digital fitness classes were also announced. Both came across as not fully thought out. Peloton moved away from its premium workout branding while not moving away from premium product pricing. The result is cognitive dissonance. As for the membership tiers, they are too confusing, limiting, and expensive.

Accordingly, it doesn’t come as a surprise that Peloton’s FY4Q23 earnings had every membership-related line item show continued deterioration.

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Roku 3Q22 Earnings, Peloton 1Q23 Earnings (Daily Update)

Hello everyone. In today's update, we will focus on earnings from two of the smaller companies playing in the tech arena (Roku and Peloton). While Roku is an Apple competitor, Peloton remains a good source for assessing how consumers are thinking about different forms of connected fitness.

Let's jump right in.

Roku 3Q22 Earnings

Roku reported earnings back on November 2nd.

With macro issues taking a big toll on Roku's advertising business, the company's user growth and engagement appear to be rare bright spots. We say “appear” as it’s difficult to get comfortable regarding how streaming companies define and measure engagement. According to Roku, an active account is anyone who has streamed something in the past 30 days. It's easy to see how that definition offers quite a bit of wiggle room for volatility.

As shown below, Roku has seen a small rebound in new user growth (on a TTM basis).

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Apple Sends Out Event Invites to Media, Peloton Is Imploding, A Peloton and Amazon Tie-up? (Daily Update)

The following update was sent to members on August 25th.

Hello everyone. Let’s jump right in.

Apple Sends Out Event Invites to Media

Yesterday, Apple sent out media invites for an in-person event at Steve Jobs Theater to be held on Wednesday, September 7th. It’s been three years since Apple last held a full-fledged in-person product event at Steve Jobs Theater.

Apple’s approach to WWDC was likely a test run for what is in store on September 7th. Apple will welcome press/media/analysts/VIPs/employees to Steve Jobs Theater to enjoy breakfast/refreshments. Guests will then be led to Steve Jobs Theater where Tim Cook will get on stage to welcome everyone. This will be directly followed by Apple playing a taped presentation. Afterwards, the press will be able to check out the new products in the demo area. Apple may even start the taped presentation a few minutes earlier for guests to encourage press liveblogging on social media.

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The daily updates have become widely read and influential in the world of Apple and technology. They are unmatched in the marketplace in terms of comprehensive analysis and research on all things Apple. Members reside in 60 countries and hold a diverse range of backgrounds and occupations. They include Silicon Valley executives and investors, the largest Apple shareholders, and the leading Apple journalists in the business.

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