about 2 years ago • 1 min
Who would have bet last year that investing in gyms would turn out more profitable than investing in at-home fitness?
The chart above shows how shares in Peloton, a maker of static exercise bikes, have been anything but static since the coronavirus pandemic hit and forced people to spend more time at home.
Peloton stock surged more than eightfold from March 2020 to January 2021 as lockdowns fed demand for home workouts. But following a 24% tumble on Thursday – sparked by a report it’s stopped production of bikes to reduce a glut of inventory – the shares have now given up almost all those gains.
An investment of $100 in Peloton on March 23, 2020, as the S&P 500 bottomed would now be worth just over $103. Over the same period, $100 invested in US gym chain Planet Fitness would have grown to $221. The companies' stunning reversal in fortune over the past couple of months suggests that investors, for one, believe the pandemic is done and dusted.
After the slide, Peloton – which has yet to make an annual profit – is currently trading at 1.7x estimated sales. That’s down from a peak of 9x sales a year ago. Instead it’s Planet Fitness’s turn to look expensive: the gym chain’s shares are changing hands for 9.4x estimated revenue – even more than Peloton at its priciest.
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