Now that people can actually go out to the gym again, a company that let fitness fanatics get together virtually is having a rough go of it.
During the worst of the pandemic, Peloton Interactive (PTON) was a winning stock and a company that brought people together for Internet-based classes and workouts.
But the stock plummeted llast year as the world ventured out again and the company suffered other setbacks. Peloton co-founder John Foley stepped down from his CEO role on Feb. 8 following a tumultuous period for the connected fitness company.
Jim Cramer spoke with Barry McCarthy, now president and CEO of Peloton Interactive, on a recent episode of the "Mad Money" TV show. McCarthy, 68, previously served as chief financial officer for both Spotify (SPOT) and Netflix (NFLX).
On Real Money, Bruce Kamich recently reviewed Peloton's charts. "The worst of the damage is probably now behind us," Kamich wrote. However, "Improvements are not going to happen overnight so there is no rush to be a buyer."
McCarthy said there are a lot of similarities between Peloton and his prior employers, Netflix and Spotify. That's because all three were long-time founder-led companies, in the content business, with global opportunities in front of them. He said there is a global market for Peloton, they just need to decide where they want to focus their efforts first.
Peloton currently has 2.7 million subscribers paying $40 a month, McCarthy noted, and he feels there's an opportunity to increase their total addressable market by lowering the upfront cost of the machines and focusing on features, functionality and content over the long haul.
When asked about the company's previous troubles, McCarthy admitted that Peloton didn't manage itself well during the pandemic, and the lack of forecasting abilities led to increased cash needs. Now, however, McCarthy said he feels Peloton was adequately capitalized given the inventory they already have.
"There's a lot of talent in the building," McCarthy concluded, and while he will always be wary about competition, he expects Peloton will remain the dominant player in the connected fitness space.
