Via Financial Times

A viral ad that was deemed disturbing and sexist caused US fitness equipment maker Peloton to experience a rough week in the stock market, with its shares shedding as much as 15 per cent before picking up on Friday.

The ad, in which a man gives a woman an exercise bike as a festive gift, spread like wildfire across the internet this week as comedians and viewers shared earnest outrage and mocking parodies.

Critics noted that the slim, attractive female character, who has become known as “Peloton Wife”, had not asked for the bike and looked terrified and desperate to please throughout the 50-second commercial. Some compared it to the dystopian television show Black Mirror, while others expressed concern about the controlling husband-and-wife relationship it depicted.

Between Tuesday, when online sharing of the ad peaked, and mid-Thursday afternoon in New York, Peloton’s share price slipped from $36.84 to $31.06, wiping more than $1bn from the company’s market value. The shares closed up 4.2 per cent to $32.63 on Friday.

The roughly 8 per cent fall since Monday was Peloton’s worst weekly performance since early October, shortly after the company’s stock market listing.

“The challenge with the ad was that it was overambitious for the amount of messaging it wanted to convey,” said Justin Patterson, an analyst at Raymond James in San Francisco.

“Where I would disagree [with critics] is that this is a sexist company,” he added, noting that Peloton has several women in leadership roles. “The negative reaction to the ad will be forgotten and then it will shift back to the fundamentals.”

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The company is known for its $2,245 exercise bikes and $4,295 treadmills that require an extra $40 monthly subscription. The seven-year-old company is lossmaking, though its net loss shrank to $49.8m in the third quarter, from $54.5m a year ago. Raymond James forecasts the company will break even in 2022.

Peloton still has plenty of fans on Wall Street, where analysts — attracted by the company’s 40 per cent gross margin and triple-digit revenue growth — have 19 “buy” ratings, one “hold” and no “sells”.

“The ad will do what it does but from a fundamentals perspective the business is doing a lot of good things,” said Ron Josey, a Washington-based analyst at JMP Securities.

In a statement on Wednesday, the company said: “We constantly hear from our members how their lives have been meaningfully and positively impacted after purchasing or being gifted a Peloton Bike or Tread, often in ways that surprise them.”

It added: “Our holiday spot was created to celebrate that fitness and wellness journey. While we’re disappointed in how some have misinterpreted this commercial, we are encouraged by — and grateful for — the outpouring of support we’ve received from those who understand what we were trying to communicate.”