Peloton vs. Barry's: Which fitness brand holds more value?

Peloton (PTON) shares saw nearly 40% in gains on Thursday, August 22, fueled by its fiscal fourth quarter revenue beat and narrower-than-expected losses for the quarter.

But as the stationary bike company and exercise content producer hits a new stride in 2024 — since falling off significantly from 2021 highs — will it face bigger challenges in the emergence of new exercise trends?

Needham & Company managing director Bernie McTernan compares Peloton's subscription model to that of Barry's Bootcamp fitness programs, especially as more people seek out more social settings through running clubs.

"I still think that connecting fitness at home, working out, it's cheaper than many other options. If you think about a $45 subscription versus a $45 Barry's Bootcamp class, getting that subscription for the month is pretty powerful. And also the amount of time that you save, too," McTernan says, who still subscribes to Peloton's Connected Fitness program.

Watch the Morning Brief's full interview with Bernie McTernan here.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Luke Carberry Mogan.

Transcripción del vídeo

Are the rise of what I see on social media, what I see among friends in, in the run clubs and the biking clubs and these more social constructs for exercising.

Is that a potential?

And I, I don't want to say this, I hesitate to say this, but is that a, a Peloton killer right now?

Yeah.

No, look, it's, it's a, it's a good question.

Um, you know, and, and there's certainly companies like w and aura where there is some sort of a network effect where, you know, you have, you know, friends, checking their sleep scores and whatnot.

Um, look at the end of the day, I, I still think that connected fitness at home working out, it's, it's cheaper than many other options.

I mean, if you think about, you know, $45 subscription versus $45 you know, Barry's bootcamp class getting that subscription for the month is pretty powerful and also the amount of time that you save too.

So, um, you know, I'm, I'm still one of the, you know, one of the 3 million Peloton, um, connected with fitness subscribers and I just think about the amount of time and money that I'm saving, but certainly there's other options, um, coming about here.

But Peloton is clearly, you know, what's their network effect?

It's the fact that they can, um, it's the amount of content, it's the quality of the content that they have to.

And ultimately, we've seen that win out in other, other industries and we think that, um, you know, that should ultimately win out in fitness as well.

But also, you know, this is just a, a tough go for the company at this moment in time.

Bernie, you and me both.

I'm still one of those subscribers and it does save you a lot of time and a lot of money.

Certainly when you compare it to Berry's or some of those other classes that cost a lot more.

All right, Bernie mctiernan.

Thanks so much.

Always great to get your insight.

Needham Company's managing director for analysis.

Thank you.