🚴 Peloton stops spinning
Friday, January 21, 2022 by Snacks
Fluffy only meets subscribers [Westend61 via Getty Images]
[SOPA Images / Contributor via Getty Images]
Yesterday’s Market Moves
Happy Friday: Put up your feet, light a lavender-scented candle, and slap on a hydrating mask that looks like a slice of deli meat. Oscar Mayer’s terrifying bologna face masks — described as “the cold-cut of self-care” — are already sold out.
Stocks dropped again yesterday as concerns over interest-rate hikes and slowing economic growth continued. British Prime Minister Boris Johnson dropped Covid safety measures in the UK, where the virus appears to have peaked.
Worse than a fake death on “Sex and the City”... Mr. Big news: Peloton is temporarily halting production of its spin bikes and treadmills, CNBC reports. In a confidential presentation, Peloton reportedly said that demand for its connected fitness equipment has faced a “significant reduction” since mid-pandemic. Picture: thousands of unsold bikes and treads sitting in storage depots.
- Peloton stock tanked 24% yesterday to below its IPO price, and was temporarily halted for trading. Shares have lost 70% of their value since November.
- Peloton plans to pause bike production for two months and treadmill production for six weeks. The pricier "+" versions of each will be paused even longer.
- Last year, Peloton majorly fumbled its response to demands to recall its Tread+ after thousands of injuries and one death. It belatedly issued a recall in August.
Pre-Zoom Beyoncé ride... Early in the pandemic, people rushed to snap up Peloton’s $2K bikes and $4K treadmills. Sales nearly tripled, subscriptions more than doubled, and it even turned a profit. But since all that demand was "pulled forward" and IRL workouts have returned, Peloton's growth has dramatically slowed. It lost $376M last quarter, and the new year is off to an even rougher start…
- 1st: CNBC reported that Peloton hired McKinsey to consult on its cost structure, which could translate to layoffs and store closures. It has reportedly started cutting jobs already.
- 2nd: SEC filings showed that Peloton insiders sold ~$500M worth of shares before the stock plunged earlier this week.
Too much optimism can be dangerous… Peloton’s growth forecasts for this year were way off. It seriously underestimated the possibility of a drop in demand. As the poster child of pandemic thrivers, Peloton had months-long shipping delays because orders were so strong. Now it has the opposite problem: so much unsold inventory that it could start a warehouse Equinox.
Like, share, subscribe… The influencer's Triple Crown. This week Instagram and TikTok began testing tools that allow creators to offer paid subscriptions. Both are hoping to drive more traffic to their apps. TikTok didn’t share details about its subscription, but here’s what we know about Insta’s:
- Only 10 creators were invited to test the feature, including Olympic gymnast @jordanchiles (431K followers) and spiritual coach @bunnymichael (216K followers).
- Creators can charge anywhere from $1 to $100 for access to subscriber-only content and special badges that help fans stand out in crowded comment sections.
- Insta is not taking a cut of creator earnings — yet. But it plans to expand the program to all creators in coming months, and may start “sharing” revenue in 2023.
Liked Jason Derulo’s TikTok… and his Reel, and his Snap story. Social giants are competing with new features to court top creators, whose millions of followers drive massive engagement. By attracting influencers with paid subscriptions, social platforms hope to win over their followers.
- Instagram, TikTok, and Snapchat have between 38M and 45M users each, and that gap is expected to narrow to about 1M users by 2025.
- Social platforms have spent billions on “creator funds” to attract top talent, and the growing creator economy is worth $100B+.
- Meanwhile, creator-focused platforms like Clubhouse, Patreon, Cameo, and OnlyFans boomed during the pandemic by connecting creators directly to fans.
Influencers are influencing tech companies… Creators have more leverage than ever before. Social companies initially focused on user growth, not creators. But now that the market is saturated and they’re competing for the same users, keeping top talent is key to engagement. And engagement is key to social’s profit puppy: ads.
What else we’re Snackin’
- Shot: Starbucks reversed plans this week to require employee vaccination and testing after the Supreme Court blocked President Biden’s vax mandate for large employers. Other businesses could follow.
- Damon: Crypto.com disclosed that 400 customer accounts were hacked this week, adding that the affected accounts were all reimbursed. The exchange has 10M users and recently made headlines thanks to a ridiculed ad feat. Matt Damon.
- Squid: Netflix stock plunged 20% yesterday after it disappointed on subscriber numbers, despite hits like “Squid Game.” Last week it hiked US and Canadian prices as growth there stalls.
- FashZon: Amazon is opening a clothing store that features algorithm-driven recommendations and touchscreen-order dressing rooms. As America’s #1 clothing seller, the ’Zon is trying to promote its private labels.
- Digi: While China plugs its digital currency (#DigiYuan) for international use, the US Fed released its long-awaited exploration of a digital dollar. But the 40-page doc doesn’t actually take a stance on creating one or not.
Snack Fact of the Day
More homes were sold in the US last year than any year since 2006
- Earnings expected from: Schlumberger and Ally Financial
Authors of this Snacks own: Bitcoin, and shares of Snap, Amazon, Google, Starbucks, Netflix, and Apple