In the marketplace companies sell to different consumers and although consumers may want generic items how they want the items differentiates companies. Sometimes it is easier to see the patterns looking back, for example fitness is a large category in the marketplace. People can do the fitness by themselves or with others for example in a gym. The way people do the fitness leads to a multiple channels to invest in – the clothes they wear, the shoes they wear, the places where they do their fitness and the infrastructure inside the gym.
In an article by Michelle Chapman and Anne D’Innocenzio of the Associated Press one of the companies which took advantage or adapted to the COVID was Peloton Interactive which makes the infrastructure found in the gym. The company allowed people to buy their equipment for their homes and with many states having lockdowns, those who routine including working out on machines bought them. As a company, Peloton which makes high end exercise bikes and treadmills ramped up productions and sold many machines. This was very good, except when states began to open up again and people had choices – to go to the gym, to ride bikes outside, the demand for the bikes and treadmills dropped and now Peloton has excessive inventory.
During COVID, Peloton increased its subscriber base from 700,000 to 3 million. When demand is high, it was very easy to attempt to ramp up production and Peloton was going to open its first US factory in Ohio with 2,000 employees (that was been cancelled). The company saw its sales double in 2020, in 2021 up another 120% and then crash in 2022.
With success there were many competitors such as high end gyms offering virtual classes; companies selling less expensive exercise bikes; companies such as Apple offering apps for fitness; Lululemon offering classes and services and a host of other competition.
Peloton is a turnaround stage and has lost money in 2022 which means the shares which roared up to $150 has dropped to $15.
Linking to dividend paying stocks, trends come and go and if as an investor you can catch a trend you will make money, as long as you sell before the trend stops or slows down. As a dividend investor you want your company to be profitable through many cycles or trends in the marketplace, in that fashion you can watch the trend, be interested in it and see where it goes.
There are more questions than answers, till the next time – to raising questions.