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Peloton’s Crash Reveals a Dangerous Market Vulnerability

As the world shut down due to the Coronavirus pandemic in 2020, Peloton quickly became a fitness phenomenon. Serving as a unique alternative to public gyms, Peloton’s popularity skyrocketed and waiting times for the machines soon exceeded 8 months from the time of order. Peloton was considered the king of at-home fitness equipment with nothing standing in its way – and even the infamous ‘wife commercial’ didn’t hinder Peloton’s growth.

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However, in recent months gyms have been reopening and the at-home fitness equipment market has changed, and not in Peloton’s favor. At the end of Peloton’s latest quarter, the company recorded its lowest growth in two years, with 2.49 million subscribers. As the world continues to open up and with competitor activity on the rise, the demand, revenue, and share price of Peloton is dropping—with more than a 70% decrease in the last six months alone. And if all this wasn’t enough, several cases of children suffering Peloton related injuries have surfaced and two major network shows have portrayed Peloton in a negative light.

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Currently, Peloton has thousands of cycles and treadmills sitting in warehouses or on cargo ships with nowhere to go. The company that went on a hiring spree in 2021 is now forced to lay off 20% of its workforce with more anticipated price cuts to come. On top of that, their CEO has stepped down and is being quoted for his prediction of Peloton becoming “one of the few trillion dollar companies in 2022” in new articles everywhere.

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At IGS, one common objection to trade credit insurance we often hear is, “Our customers are good as gold. Why would we need it?” However, Peloton’s crash is a very fresh—and public—example on how that’s not always the case. Market trends and consumer shifts have dramatically impacted the credit worthiness of a public company that was printing money only just last year. With IGS trade credit insurance, we protect you from unexpected bad debt loss coming from bankruptcy or non-payment while also helping you create new sources of revenue, improve cash flow, and elevate your buyers’ perception of you when you need it most. IGS is here to give you peace of mind that you and your business are fully protected.

If you want global growth without all the global risk, give our team a call.