For Peloton Interactive Inc (NASDAQ:PTON), a high-growth stock, the performance at the beginning of the year was very dismal. Shares in the fitness equipment company soared about 500 per cent last year, but have fallen nearly 31 per cent so far this year.

The performance is far worse than the flagship fund ARK Innovation ETF (NYSE:ARKK) of Cathy Wood, the queen of the bull market, which is widely seen as a benchmark for disruptive technology companies. The growing ETF has also been affected by the market sell-off in recent weeks, falling nearly 5 per cent this year.

Peloton shares fell, reflecting concerns among some investors that the stock had peaked in the short term.

We believe that the current bearish trend in Peloton reflects short-term and long-term factors that keep investors on the sidelines. In the short term, Peloton will struggle to keep up with the surge in demand for its fitness equipment.

Fitness equipment faces supply bottleneck

Peloton said sales were affected by supply shortages of its most popular sports bike models in the quarter to December, forcing customers to wait longer than "acceptable".

The launch of the new treadmill will also be delayed, CEO John Foley said on an analyst conference call. In most parts of the United States, the new date will be delayed from the end of March to May. This is to meet demand in the UK and elsewhere, where the new treadmill was launched in December.

Peloton bought fitness equipment maker Precor in December for $420 million to boost its manufacturing capacity in the United States. This is the largest acquisition in the company's history. Peloton plans to invest more than $100m in airfreight and accelerated shipping in the first half of the year to speed up delivery.

Despite supply constraints, the latest figures from Peloton show that the company is still on a path of rapid growth. In the quarter ended December 31, Peloton turned a profit, with revenue up 128% from a year earlier and quarterly sales exceeding $1 billion for the first time.

Online fitness subscribers (that is, paying users on Peloton devices) jumped 134 per cent, while paid digital subscribers (users subscribing to courses on smartphones and other devices) increased by 472 per cent. Peloton now has more than 4.4 million users.

After the epidemic, PelotonCan it continue to grow?

In the long run, the main question is whether Peloton is just a pure "epidemic concept stock". Once the epidemic subsides and people return to the gym, how will Peloton maintain its growth momentum?

One indicator of Peloton's future growth potential is that the company's expensive fitness equipment does have user stickiness. Those who are willing to spend more than $2000 on a sports bike are less likely to give up a more comfortable fitness environment at home and return to a crowded gym.

Peloton Chief Financial Officer Jill Woodworth (Jill Woodworth) told the Wall Street Journal in a recent interview:

"the fitness market is very large, and there is enough space to accommodate a large number of competitors, whether in physical stores or online fitness platforms. "

"We believe that we still have a lot of room for growth. We believe that there are a large number of people who are unlikely or may never return to the gym. So, for us, the most important thing is to continue to promote the growth of online fitness members and maintain our first-mover advantage. "

On average, analysts expect Peloton's share price to rise 30 per cent from its current level to $166.35 over the next 12 months if it overcomes supply shortages and continues to expand its membership.

Summary

In the short term, Peloton shares are likely to remain under pressure as investors wait for signs of a solution to the supply problem. However, this temporary negative factor is a buying opportunity for long-term investors. After all, Peloton has a strong share of the home fitness market, and this first-mover advantage will make it difficult for newcomers to match.