Peloton looking at new stores, new equipment to land new customers

New stores, new products and new prices could make for a healthy holiday for interactive fitness company Peloton.

From the Aventura Mall in South Florida to the Pinecrest Mall in Ohio to the PCH Outdoor mall in Long Beach, California, Peloton is putting up new storefronts just in time for the holiday season.  With more than 80 Peloton shops in place, all may be getting ready to showcase a new product line.

In an effort to broaden its appeal to more middle-market consumers, Peloton is reportedly developing a new treadmill that will cost significantly less than the current $4,000 model. It is also adding a new piece of equipment: a rowing machine, according to several published reports.

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Despite this move to try and add new customers buying "cheaper" equipment, some market watchers remain doubtful about the potential market for more customers due in part because, besides paying for the Peloton machines, users also must pay $40 per month for a subscription (there is also an app subscription for mobile phones for $19.49).

"I believe Peloton is just another 'fad' that will go out of style, like dozens of others before it."

- Stephen McBride of RiskHedge

"Having a home gym or gym equipment at home seems great in theory," Stephen McBride, a fund manager and chief analyst at RiskHedge told FOX Business. McBride said the digital bells and whistles of Peloton may not be able to top the sweat and atmosphere of the local gym. "I'm guessing 9 out of 10 folks that get it, end up never or rarely using it. Simply it all boils down to motivation. . . it's a lot easier to push when you're in the right environment, versus having a stationary bike in your spare bedroom," said McBride.

CAN PELOTON BE MORE THAN JUST A FITNESS FAD?

In a company earnings call, CEO John Foley recently said there is a wide variety of innovation within its existing and future products.

“We are a technology software innovation company at our core. We created the Peloton Bike, it was pretty innovative. The treadmill is at least as good of a product or platform, potentially better for full-body fitness, obviously,” Foley said. “In the coming years, there will be new platforms, new products, new innovation that comes out of Peloton that will I believe surprise people and delight people and we're having fun innovating and our [research and development] lab is very busy.

However, Peloton's Jessica Kleiman would not confirm any new products to FOX Business, saying the company "is always working on ideas, we have no new products to announce at this time."

However, the keywords in that statement may be "at this time" as several published reports have detailed the new products.

According to a recent analysis by Charlotte, N.C.-based Bank of America, expanding Peloton's user base with new hardware, new apps, and lower-priced products are important in reaching more customers. The company indicated around its initial public offering that the current treadmill sold around 25,000 units in its first nine months.

PELOTON SKIDS IN TRADING DEBUT

Bank of America said Peloton is also exploring apps for Amazon.com Inc’s Fire TV and the Apple Watch to complement its smartphone software.

The products are expected to be introduced in 2020 two years after the original treadmill debuted.

Peloton Interactive completed its IPO in late September but slid 6.9 percent in its trading debut.

Shares of the home-fitness company opened at $27 a piece, down from the $29 where they priced a day earlier. At $29 a share, the offering would've raised $1.16 billion and given Peloton an $8.2 billion valuation. Still, the stock has seen an uptick of late up more than 8 percent in the last month.

Whether as a stock or as a form of fitness, RikHedge's McBride said, "I believe Peloton is just another 'fad' that will go out of style, like dozens of others before it."

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