Get On Your Bike: Peloton’s “sexist” ad results in drop of market value
February 17, 2020
2 min read
What's going on here?
Peloton’s sexist Christmas advertisement prompts its market value to drop by over $1bn.
What does this mean?
Peloton’s 2019 Christmas advert for its exercise bike has received backlash for being sexist and “dystopian”. It went viral in early December for the way it portrayed a young woman who was gifted one of Peloton’s $2245 exercise bikes. It features the woman documenting her use of the exercise bikes and thanking her partner for changing her life. Not only was this ad followed by social media backlash, but it also led to a 9% drop in Peloton’s stock price.
What's the big picture effect?
This event has led to a major reputational crisis for Peloton. The fact that this ad single-handedly prompted a drop in Peloton’s stock price is noteworthy. Often we see TV campaigns being used as a method of bouncing back from a reputational crisis, not the opposite as happened here. This goes to show that public perception is extremely influential, and that it can have tremendous consequences, especially in the short term. Therefore, companies have to be increasingly cautious when assessing their social media strategies.
Peloton could take a cue from brands such as Chipotle and Uber which have deployed successful mitigation measures in the past to avoid widespread brand crises. After 2 Chipotle restaurants were linked to e-coli outbreaks, the brand designed an ad campaign around fresh ingredients and its employees preparing the food. This year on year increase in TV advertisement expenditure led to an astounding 50% increase in revenue for the brand in early 2019.
This experience shows that public perception and consumer confidence still remain vital, and for brands to survive in this uber competitive market, there needs to be extensive checks before the content is released. Without these checks, stock prices are likely to be at risk, and companies will have to come up with innovative solutions to mitigate.
Report written by Maya Sajeev
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