Peloton and Lululemon joined forces - analysts don't expect huge upside
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Peloton Interactive (NASDAQ:PTON) showed a 14.0% gain in early trading on Thursday as investors sized up the strategic partnership that the exercise company announced with Lululemon (NASDAQ:LULU). Shares of Peloton cooled off from the nearly 30% pop late on Thursday after the deal was first announced.
Under the terms of the partnership, the brands plan to engage their global community of members in the United States, Canada, the United Kingdom, Germany and Australia through technical athletic apparel, real life experiences, special programming, and original content, expanding the brand awareness and reach for both companies. In addition, a select number of Peloton Instructors will become lululemon Ambassadors as part of the partnership.
Bernstein analyst Aneesha Sherman noted benefits for both sides of the deal as Lululemon (LULU) will earn some revenue share from its co-branded apparel sold by Peloton and Lululemon (LULU) will earn some revenue share from each Studio member that uses its workouts, although neither revenue stream is expected to be material. "The bigger benefit to both brands is around [long-term] brand equity and customer acquisition. PTON expects an uptick in traffic to its stores and website as a result of LULU members using its workout app, including 13m free members being offered free PTON workouts," updated Sherman.
Meanwhile, Vital Knowledge said the pact is not a monumental development for either company. The firm thinks that after Lululemon (LULU) shuts its Mirror workout products, Peloton Interactive (PTON) may see a modest bump in subscriptions, but it probably wonât be material.
Lululemon (LULU) inched up 0.35% in premarket action on Thursday. In the gym club sector, Planet Fitness (PLNT) was down 0.77% in premarket trading, Xponential Fitness (XPOF) shed 1.36%, and F45 Training Holdings (OTC:FXLV) was inactive. Those stocks have reacted in the past to major developments with Peloton Interactive (PTON).

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