Is it a brilliant strategy, or a desperate attempt to reach potential exercise-equipment buyers? That’s the billion-dollar question as Peloton Interactive (NASDAQ:PTON) just rolled out a program to sell used or “refurbished” bikes. Suffice it to say, PTON stock traders aren’t enamored with Peloton’s new strategy.
Peloton has taken its investors on a rollercoaster ride since the onset of the Covid-19 pandemic. Due to a series of unfortunate events, Peloton’s shareholders are holding a heavy bag and the company apparently has to get creative to bring investors back into the fold.
Thus, Peloton Interactive is trying something new: selling refurbished Peloton Bike and Bike+ models. Each refurbished bike will be “thoroughly inspected, cleaned and tested to ensure it meets Peloton standards.” Plus, every refurbished Peloton bike comes with a 12-month limited warranty.
Maybe, this strategy will entice some cost-conscious consumers. Are traders on Wall Street expecting Peloton’s refurbished-bike-sales program to be a resounding success, though?
What’s Happening With PTON Stock?
It appears that the sentiment is largely negative today, as PTON stock was down nearly 4% as of 10:30 a.m. Eastern. This comes at the end of a bruising year for Peloton shareholders.
Why would the company’s investors object to Peloton’s foray into used-bike sales? A closer look reveals that Peloton Interactive’s refurbished bikes, while less expensive than the brand-new bikes, aren’t exactly dirt-cheap.
A refurbished Peloton Bike will cost $1,145 (all prices mentioned here include delivery and setup). That’s cheaper than a new Peloton Bike for $1,445, but it’s still rather expensive.
Meanwhile, a refurbished Peloton Bike+, even after a $500 discount compared to a new one, has a price tag of $1,995. Again, this may be too pricey for some potential customers.
During a time of high inflation, shoppers may choose necessities over discretionary items like exercise bikes. Therefore, today’s financial traders probably aren’t convinced that Peloton Interactive’s used-bike program will generate strong revenue. For now, at least, it looks like Peloton’s latest recovery attempt isn’t catalyzing a rebound in PTON stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
