Peloton drops as Wedbush downgrades the fitness company on concerns gym reopenings will boost competition

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  • Peloton shares pulled back 5% on Wednesday after a downgrade to neutral from Wedbush.
  • The company is facing headwinds from gym reopenings and further competition from at-home fitness companies.
  • The 12-month price target was cut to $130 from $115.
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Peloton shares fell Wednesday following a ratings downgrade to neutral at Wedbush, which sees the company facing slower demand as more options for exercise become available with the economy reopening.

Shares of Peloton lost as much as 5.4%, hitting $113.33 before paring the decline to 4.4%.

The rating was dropped from outperform and a 12-month price target was lowered to $115 from $130, implying a potential decline of more than 11% in Peloton’s share price.

The high-end fitness equipment and services company is heading into the next leg of its growth story and it will need to stoke business through savvy marketing and by offering compelling new products to combat competition from other companies, said Wedbush in a Wednesday note.

After the peak of the coronavirus pandemic, gyms are reopening and people have more choices in how to exercise outside of their homes including free options such as running.

“During this transition, we think a neutral rating makes sense until (1) we have better visibility on where underlying demand growth will shake out in the post-pandemic environment and (2) we have better visibility on what investors will be willing to pay for this growth,” said James Hardiman, a Wedbush analyst covering the leisure sector.

The stock year-to-date has dropped about 24% but remains higher by 81% over the past 12 months. Peloton’s business has grown during the COVID-19 pandemic as mass lockdowns forced millions of people to work and exercise at home.

Wedbush has been tracking customer engagement data from social media platforms, Google trends, and Peloton’s own metrics, and in the June quarter, year-over-year growth has substantially decelerated, it said.

That “should not be surprising given seasonal and reopening headwinds, but nonetheless would seem to mark a turning point for a company that has continually defied gravity since its IPO, and presents evidence that the law of large numbers is finally catching up,” said Hardiman.

Peloton in late June said it would offer discounted products and services through a new corporate wellness program, an announcement that propelled the stock to build on gains following a Bloomberg report that the company was pushing into the wearables market.

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South Korea bans fast-paced music in gyms and limits treadmill speeds to a walk as COVID-19 cases soar

man on treadmill in South Korean gym
People exercise at a gym in Seoul on July 13, 2021, as South Korea announced implementation of level 4 social distancing measures amid concerns of a fourth wave of the coronavirus pandemic.

  • South Korea is seeing a spike in coronavirus cases.
  • Health officials have asked gym-goers to slow down in attempt to curb the spread.
  • Some experts are skeptical that capping music and treadmill speeds will be effective.
  • See more stories on Insider’s business page.

South Korea is tightening coronavirus prevention measures as the country sees record-breaking daily case rates. Although Seoul is not yet going into full lockdown, residents are not allowed to go to nightclubs or large social gatherings for at least two weeks.

They’re also not permitted to work out hard and fast at the gym. Under the new regulations, treadmills are capped at 3.7 miles per hour, and music played over the gym speakers cannot exceed 120 beats per minute.

For reference, that’s about the tempo of “Call Me Maybe” by Carly Rae Jepsen, or the BTS hit “Boy With Luv.” Both songs would set the pace for a brisk walk or a really slow jog.

Dua Lipa’s “Levitating” also passes the test at 109 BPM, as does “MONTERO (Call Me By Your Name)” by Lil Nas X, which clocks in around 89 BPM.

But anything more strenuous than a power walk has been deemed a transmission risk. (That means gym-goers will not be able to angry run to “good 4 u” by Olivia Rodrigo or bench press to the beat of Kanye West’s “Power.”)

Under the new rules, exercisers are also required to wear masks, even if fully vaccinated, and workout class sizes are limited. While those policies could help curb the spread of COVID-19, experts are skeptical that slowing down the music will have the intended effect.

Some infectious disease experts are baffled by the new rule

The goal of the new gym restrictions is to prevent heavy breathing and sweating on other gym-goers, according to health officials.

“When you run faster, you spit out more respiratory droplets, so that’s why we are trying to restrict heavy cardio exercises,” Son Young-rae, spokesperson for the Ministry of Health and Welfare, said in a radio interview Monday.

But some scientists and lawmakers aren’t buying it.

Dr. Kim Woo-joo, an infectious disease specialist at Korea University Guro Hospital in Seoul, told the New York Times the gym policies were “absurd” and “ineffective.”

“So you don’t get COVID-19 if you walk slower than 6 km per hour?” said Kim Yong-tae, a member of the main opposition People Power Party, according to Reuters. “And who on earth checks the BPM of the songs when you work out? I don’t understand what COVID-19 has to do with my choice of music.”

Other experts pointed out that slowing down the music won’t necessarily discourage people from working out at a high intensity. And other prevention measures, like ensuring good ventilation and spacing out gym-goers, have already been proven effective.

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How to cancel a Planet Fitness membership in 2 ways

Planet Fitness gym
If you want to cancel your Planet Fitness membership, you must do it in person or by mail.

  • To cancel a Planet Fitness membership, you need to visit your gym in person or write a postal letter.
  • Planet Fitness doesn’t allow you to cancel your membership by phone or online.
  • Your membership might already be on hold due to pandemic restrictions, and you may be able to get a three-month hold for medical reasons.
  • Visit Insider’s Tech Reference library for more stories.

Planet Fitness is a popular chain of fitness centers (it had more than 15 million members as of March 2020), but the franchise has not embraced modern customer service practices, especially when it comes to canceling membership plans.

Instead of letting you close your account online, Planet Fitness requires you to visit your home club and speak to a representative at the front desk or send a letter via the postal service.

How to cancel your Apple Fitness Plus subscription on any Apple deviceHow to sign up for Apple Fitness Plus in 3 ways, and what you’ll need to subscribeWhat devices work with Apple Fitness Plus? Here’s what’s compatible with Apple’s workout appYou need an Apple Watch to sign up for Apple Fitness Plus, but not for every workout – here’s why

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Peloton stock price surges 14% to record high on $420 million Precor acquisition

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  • Peloton shares spiked as much as 14% to a record high on Tuesday, boosting the connected-fitness company’s market capitalization by up to $6 billion.
  • The maker of internet-connected exercise machines has agreed to acquire Precor, a leading commercial supplier of fitness equipment, for $420 million in cash.
  • Peloton intends to use Precor’s US manufacturing facilities to ramp up production and improve its delivery times.
  • The company also expects the deal to bolster its innovation and generate more sales of equipment and subscriptions to gyms, hotels, colleges, and other commercial customers.
  • Visit Business Insider’s homepage for more stories.

Peloton stock surged as much as 14% to a record high on Tuesday after the connected-fitness company struck a deal to acquire Precor for $420 million in cash. The rally added up to $6 billion to Peloton’s market capitalization.

Precor makes cardio and weight machines, and ranks among the largest commercial suppliers of fitness equipment in the world. Peloton plans to use the 40-year-old company’s 625,000 square feet of US manufacturing capacity to make more equipment and ship it to domestic customers sooner.

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The takeover will also add nearly 100 people to Peloton’s research-and-development team. Moreover, Peloton hopes it will boost sales of its bikes and treadmills – which are equipped with internet-connected screens to allow users to stream live and on-demand classes – to gyms, hotels, colleges, apartment blocks, and companies that buy exercise equipment for shared use.

Peloton stock has skyrocketed 450% this year as the pandemic has spurred more people to invest in home gyms and online fitness classes. The company’s revenues spiked 232% year-on-year last quarter to $758 million, swinging the company from a $50 million net loss to $69 million in net income.

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However, Peloton’s manufacturing and distribution has been severely restricted this year, resulting in lengthy waiting times for customers. Its Precor purchase is likely intended to help iron out those issues.

Here’s a chart showing Peloton’s remarkable stock-price gains this year:

Peloton stock chart

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