What happens when your company becomes a meme? Sometimes it’s very good, and other times it’s very, very bad.
Peloton’s holiday ad may still pay off for them, but as of now it’s been nothing but negative. The exercise-related company’s holiday-themed ad should have been innocent and innocuous — so what went wrong?
Peloton Misjudges the Political Temperature
It’s difficult to see how the ad made it past test audiences. The Peloton ad is simple, and it could be charming: a man gives his wife an exercise bike, and she uses it every day to lose weight, even sending thoughtful video logs to him. It’s healthy! It’s endearing!
First: How many people are even interested in purchasing a $2,000+ exercise bike that has video? Not a lot. So, the Peloton ad already starts off in a privileged space, a space that alienated a lot of viewers. Not only was it a product too expensive for the average person, but it seemed unnecessarily luxurious.
That wasn’t the only issue. Another difficulty: the woman in the ad is already quite thin, and that didn’t track well with the audience. Essentially, the husband told his already thin wife that she needed to lose weight, and she readily agreed.
Ultimately, it was found to be more frustratingly humorous than endearing. To many, it’s just a rich couple doing rich couple things; people who are already fit trying to be more fit; and people who have way too much free time using that free time for their own vanity.
Here is the ad, for those who haven’t seen it:
Peloton Stock Falls After the Internet Goes After the Ad
Perhaps the impact of the meme is more interesting than anything about Peloton itself. The backlash after the ad caused the stock to drop by 15%, which is incredible when you consider that most of the people mocking the ad had never even heard of Peloton before, would never have purchased a Peloton, and will never be relevant to Peloton’s advertising.
People need to understand the power that the Internet now has over valuations. A single rumor through the Internet can cause a stock to completely crash. But it wasn’t just the ad, of course — it was also that it seemed as though Peloton had become radically divorced from reality. That’s never a good sign for any consumer-facing product.
Investor Skepticism Continues the Free Fall
After the initial fall due to the ad, an article valued Peloton at $5 a share. That may be unnecessarily skeptical, but it is something that had an impact on the stock price, which is another thing that people have to consider. Rumors about stock price can also strongly impact stock price.
At this point, Peloton could rise or continue to fall, and it’s going to largely depend on public sentiment. People need to regain their confidence that the brand understands what it’s doing before they start investing. And whether the company has good fundamentals or not is still up to debate.
What is obvious is that Peloton’s stock is suffering and it’s likely to suffer for some time in the future.
A Way Forward for Peloton
Some analysts argue that this may not ultimately be bad for Peloton, as (at very least) the ad did catapult the company into public consciousness. While Peloton is a large business with many subscribers, it still does create niche products that are aimed at the upper end of middle class. A lot of people hadn’t ever heard of Peloton before the Internet blitz, and they’re going to think about Peloton automatically now when they think about similar products.
For Peloton, it’s important that they show that they do understand their audience, and they understand the way that the market is shifted. Many people are looking to get fit, and they are looking for products they can use in their own home. In the case of Peloton, the problem wasn’t necessarily the product, but rather the tone that they struck. If they can get a better tone (and assure their shareholders that they’re committed to the new direction), the stock may yet rebound.