Many stocks that were hot buys during the pandemic have cooled off, significantly. Peloton Interactive
(NASDAQ:PTON) is no exception. The company’s high-priced bikes looked like attractive options for
working out amid stay-at-home orders. But now with the economy opening back up, people able to go
the gyms, and inflation making the company’s bikes look even more unaffordable, it’s of little surprise
that Peloton has fallen out of favour with investors.
Its shares are down a mammoth 84% over the past 12 months. And the company’s latest earnings
results only made it look like an even worse buy moving forward.
Earlier this month, Peloton released its third-quarter earnings. Sales of $964.3 million fell short of
analyst expectations of $972.9 million. That was also far less than the $1.26 billion that Peloton reported
in the prior-year period. And the bottom line was disaster as the company’s per-share loss of $2.27 was
more than double the $0.83 loss that Wall street was anticipating for Q3.
Peloton is sitting on significant inventory, suggesting that its products still aren’t moving quickly. Plus,
the company is looking to raise its subscription prices, which will make its memberships less attractive,
and likely contribute to already struggling bike demand.
Even despite remarkable sales growth a year ago, Peloton wasn’t a profitable business. Now, facing
some significant headwinds, it’s going to be even more challenging for the company to have any hope of
breaking even. And that’s why as bad as things have gotten for Peloton, they could still get a whole lot
worse for the company and its stock