Shares of Peloton, a company that makes at-home training equipment, have fallen by a whopping 35 percent.
On April 6, 2020, Cari Gundee rides her Peloton exercise cycle in San Anselmo, California, at her house.
A Supplier of at-Home Training Equipment
Shares of Peloton, a supplier of at-home training equipment, fell 35% on Friday after the company lowered its annual sales projection by as much as $1 billion, reports the Wall Street Journal.
After Peloton’s disappointing fiscal first-quarter financial report was revealed on Thursday, the stock was downgraded by at least four Wall Street investment firms.
After seeing tremendous growth last year owing to the coronavirus outbreak, the company’s share price is losing steam and more people are returning to the gym. For example, Planet Fitness announced on Thursday that its membership levels have nearly returned to their pre-pandemic highs. On the announcement, that stock surged to an all-time high.
Peloton CEO John Foley noted on the company’s earnings conference call that “our employees have never experienced a more challenging operating environment in which to steer our expected performance this year.”
Peloton’s website traffic has decreased quicker than expected in recent months, according to Foley. According to him, customers’ experiences in the company’s physical stores were just as disappointing.
The Price of Peloton’s Original Bike Product
A 20% reduction in the price of Peloton’s original Bike product in August put even more strain on the company’s profitability. There has been an increase in Bike sales, but fewer individuals are opting for the more expensive Bike+, according to company executives on Thursday.
Taking into account its updated fiscal 2022 expectation, Peloton stated that it seeks to reduce its cost structure by making “substantial changes,” including “major adjustments” to its hiring plans (source).
Truist Securities analysts expect Peloton to take a few quarters to get back on its feet because to the ongoing economic crisis and growing logistical costs.
Lowered its Price Objective
On Friday, Truist dropped its price objective for Peloton shares to $68 from $120 and lowered its recommendation on the stock from buy to hold. The stock price was $86.06 on Thursday, a 43% decline from its year-to-date high.
Credit Suisse, on the other hand, has lowered its price objective from $148 to $112 in the interim.
For this reason, we’re beginning to worry when they’ll get a return on all the capital they’ve invested, the firm’s clients were told by analysts. “In the long term, the connected fitness opportunity may still be there, but the path to get there appears more arduous.”
Peloton has lowered its June connected fitness subscriber target from 3.63 million to between 3.35 million and 3.45 million.
JPMorgan have Removed Peloton from their Focus List
Analysts at JPMorgan have removed Peloton from their focus list, although they still maintain an overweight rating on the stock ahead of the holiday shopping season.
They estimate Peloton’s treadmill company might reach a consumer market that is two to three times as large as its bike business, according to Doug Anmuth and his team.
According to JPMorgan Chase, Tread is off to a slower-than-expected start, but it’s still early and sales have risen up since Peloton started marketing the device about 30 days ago.”