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Peloton Could See Bump From At-Home Workouts on Virus Concerns

Julie Verhage

(Bloomberg) -- Americans have so far largely been spared measures taken in China and elsewhere to contain the deadly coronavirus, keeping thousands of healthy people homebound and left to binge-streaming entertainment to ward off boredom. But that could soon change, and home-exercise company Peloton Interactive Inc. may be well-placed to benefit from restless workout fans.

This week the U.S. Centers for Disease Control and Prevention warned Americans to prepare for a coronavirus outbreak at home that could lead to significant disruptions of daily life, including school closings, cancellations of sporting events, concerts and business meetings.

“We believe certain U.S. consumers will be less comfortable over time going to their gym and more likely to order a Peloton bike to stay home,” Laura Martin, an analyst at Needham and Co., wrote in a note to investors Tuesday. “This may drive higher unit sales and subscription revenue in 2020 than are currently in our estimates.”

A few Chinese gym companies are seeing a similar reaction. Some analysts say the virus may provoke a moment when people learn to get comfortable doing a lot more at home and keep up the newfound habits after life returns to normal.

New York-based Peloton, which makes internet-connected exercise equipment, also has an app that people can buy as a monthly subscription. While its workouts have been available on phones and tablets for some time, the company recently began offering an app for the Apple Watch, as well as the ability to stream classes on Amazon.com Inc.’s Fire TV.

In its most recent earnings report, Peloton said it added 149,000 new subscribers during the quarter, bringing its total to 712,000. The company estimated it will have as many as 930,000 connected fitness subscribers this year. Connected fitness subscribers are people who own a piece of Peloton hardware, like the bike or treadmill, and pay a monthly subscription to access digital workouts. It’s a more lucrative category than people who pay for its app alone. If the Covid-19 virus, as it’s officially known, does lead to more in-home workouts, the figures could be on the high end or even above that range.

Peloton shares were up about 7% on Wednesday, while the broader markets were generally down, having slid more than 6% over the prior two days.

In China, there’s evidence that demand for at-home workouts is increasing. Apps like Fit.me and 7 Minute Workout, which both offer workouts in the home, have been rising in rankings of top health and fitness apps in the region, according to data tracking site SimilarWeb. Meanwhile Nike Inc.’s Run Club, used to track outdoor activity, has fallen. In the U.S., Aaptiv Inc., Mirror, and Nike’s Training Club could stand to benefit as well if U.S. consumers opt to skip the gym and get their sweat on at home instead.

To contact the reporter on this story: Julie Verhage in New York at jverhage2@bloomberg.net

To contact the editors responsible for this story: Molly Schuetz at mschuetz9@bloomberg.net, Andrew Pollack

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