The Ratings Game: Peloton is ‘clearly benefiting from global quarantines,’ new data show

With many gyms closed due to the COVID-19 pandemic, people are increasingly turning to at-home exercise and that seems to be helping Peloton Interactive Inc. raise its profile.

The trendy maker of fancy spin bikes and treadmills also has an app for yoga and other workouts, and the company decided to offer that as a free 90-trial after the novel coronavirus outbreak began forcing more people to stay indoors.

New data indicate that the digital offering is catching on quickly, according to Evercore ISI analyst Lee Horowitz. March downloads of the Peloton PTON, +0.89% app are up five times relative to the company’s February run rate, he said, based on a review of third-party app data from Sensor Tower.

“We are seeing Peloton subscriber growth and engagement clearly benefiting from global quarantines,” he wrote.

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While usage of the digital-only app is free to start with, the hope is that some of these users will stick around and become paying users once their trials expire. Horowitz also argues that Peloton could be seeing lower churn from existing paid users on services now that customers have fewer exercise options outside the home.

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“We do not discount the fact that a sustained global recession could put significant pressure on consumer’s discretionary budgets, and thus weigh on Peloton gross additions,” he wrote. But he estimates that the company has already picked up about 80% of its gross additions for this fiscal year that ends in June, and he’s encouraged that the company hasn’t altered its March-quarter or full-year outlook yet.

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Horowitz rates Peloton’s stock at outperform with a $34 target. The stock is up 4.8% in Thursday’s session and it’s lost 12% over the past month as the S&P 500 SPX, -3.37% has dropped 17%.