Insights

Why Peloton Interactive Is Rising Today

What happened
Shares of Peloton Interactive (NASDAQ: PTON) were finally showing signs of life on Wednesday, trading 4.4% higher as of 11:39 a.m. ET. That came after several days of dramatic declines that followed the release of a worse-than-expected earnings report for its fiscal 2022 third quarter, which ended March 31.
The connected fitness equipment maker’s stock is down by about 23% over the past week, so shareholders will be thankful for any good news to grab hold of.
Image source: Getty Images.

So what
Revenue plummeted by 24% year over year in its fiscal Q3, finally giving up the ghost in terms of the mid-single-digit percentage growth it had been posting after years when investors became accustomed to triple-digit percentage gains on the top line. Its loss of $757 million, or $2.21 per share, was not only worse than the year-ago loss of $0.03 per share, but well underperformed analysts’ rosy consensus expectation for an $0.83 per share loss.
Although the number of connected fitness subscribers at Peloton was still growing, because it has raised monthly subscription rates to $44 from $39 effective in June, it believes it could see a falloff as some subscribers may balk at paying the elevated rate.
Now what
The market for exercising indoors at home is returning to its pre-pandemic trends. Many people just prefer to go to gyms, training centers, and even the great outdoors when it’s time to work up a sweat.
Peloton’s stock, though, seems to be responding to analysts’ new views. Many firms are maintaining a neutral rating on the stock. Analysts at Goldman Sachs, Truist, and MKM Partners have not cut their ratings for the stock, though they, and those at several other institutions — including Bank of America and Deutsche Bank — have cut their price targets for it. BMO Capital is one that rates Peloton Interactive at underperform.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs and Peloton Interactive. The Motley Fool has a disclosure policy. –

What happened

Shares of Peloton Interactive (NASDAQ: PTON) were finally showing signs of life on Wednesday, trading 4.4% higher as of 11:39 a.m. ET. That came after several days of dramatic declines that followed the release of a worse-than-expected earnings report for its fiscal 2022 third quarter, which ended March 31.

The connected fitness equipment maker’s stock is down by about 23% over the past week, so shareholders will be thankful for any good news to grab hold of.

Image source: Getty Images.

So what

Revenue plummeted by 24% year over year in its fiscal Q3, finally giving up the ghost in terms of the mid-single-digit percentage growth it had been posting after years when investors became accustomed to triple-digit percentage gains on the top line. Its loss of $757 million, or $2.21 per share, was not only worse than the year-ago loss of $0.03 per share, but well underperformed analysts’ rosy consensus expectation for an $0.83 per share loss.

Although the number of connected fitness subscribers at Peloton was still growing, because it has raised monthly subscription rates to $44 from $39 effective in June, it believes it could see a falloff as some subscribers may balk at paying the elevated rate.

Now what

The market for exercising indoors at home is returning to its pre-pandemic trends. Many people just prefer to go to gyms, training centers, and even the great outdoors when it’s time to work up a sweat.

Peloton’s stock, though, seems to be responding to analysts’ new views. Many firms are maintaining a neutral rating on the stock. Analysts at Goldman Sachs, Truist, and MKM Partners have not cut their ratings for the stock, though they, and those at several other institutions — including Bank of America and Deutsche Bank — have cut their price targets for it. BMO Capital is one that rates Peloton Interactive at underperform.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs and Peloton Interactive. The Motley Fool has a disclosure policy.

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