By Sam Boughedda
Morgan Stanley said in a note to clients Wednesday that the future of fitness is hybrid, and Peloton's (NASDAQ:PTON) competitive landscape remains fierce.
An analyst explained that the firm's new AlphaWise survey looked into gym vs. at-home fitness trends, and with just 21% of at-home equipment both connected and subscribed, they still see share gain opportunity for connected fitness. However, they added digital is likely a less attractive opportunity for Peloton "given fractured share and low barriers to entry."
Struggling fitness equipment maker Peloton has seen demand plummet since the end of the pandemic. As a result, its shares have fallen 88.5% in the last 12 months and a further 4% on Wednesday.
"At-home fitness is the most popular way to work out with ~50% of Americans already working out at home...but at the expense of engagement with ~25% of at-home exercisers without equipment working out 3x or less/month vs. just 8% of gym members," explained the analyst. "Contrary to common belief, digital/connected fitness looks to be a complement to gym usage...not a replacement: The PTON thesis often has often relied on the assumption that connected fitness will siphon away gym members. However, our survey data show a very different story - relative to others, gym members are ~3x more likely to subscribe to a connected bike and ~4x more likely to subscribe to a connected treadmill."
"With 13% share of at-home bikes, PTON has quickly become the space's leader despite the premium price point...however, the space remains competitive with five other players garnering >5% share. In treadmills, PTON has quickly grown to the #2 spot, well above the other connected fitness start-ups like Echelon. More notably, PTON has dominant share among Gen Z (~23%/~26% in bikes/treadmills), positioning it to potentially gain further share as the cohort ages into its prime spending years," the analyst added.