why should i buy peloton stock

Should You Buy Peloton Stock After Earnings?

• Peloton has always lowered prices. Some investors believe the recent announcement to drop the price of the Peloton Bike...
• Pursuing the lifetime value of each customer. Peloton doesn't focus on maximizing profit on lower-margin hardware. The...
• Building its lead over the competition. Overall, by lowering prices and increasing...

Full Answer

Should investors be worried about peloton stock?

That's a stellar growth rate, but investors are worried about a slowdown in monthly workouts. Peloton's subscribers pay the same monthly fee regardless of how many times they use their equipment. Therefore, investors should be more focused on customer retention than average workouts, because that's how the financials work.

Should you buy peloton before it goes back up?

Peloton has finally announced a fix for some of its treadmills, which were recalled earlier this year after reports of accidents and injuries to users, though they're not yet back on sale.

Is it time to sell peloton stock?

This adds up to a cash crunch for Peloton sometime in the near future if this trend continues. And that is not going to fare well for PTON stock. However, the stock has been a favorite of analysts. The problem is that PTON stock has been falling this year. It ended last year at $151.72. As of Sept. 23, it was down $57.34 to just $94.38 per share.

Why you should buy the dip in peloton?

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Is Peloton worth buying stock?

Revenue fell 24% last quarter, but falling sales are not the worst of Peloton's problems. Peloton needs to bring inventory in line with demand and then figure out how to grow from there. These problems will take time to fix, so there should be no rush to buy the stock.

Why are people buying Peloton stock?

After its big run in 2020, Peloton stock's Relative Strength Rating has taken a big hit as more people return to gyms and in-person fitness classes. PTON stock now has an RS Rating of 2 out of a best-possible 99.

Is Peloton a good long term stock?

Stocks like Peloton, Plug Power & Rivian are long-term winners.

Will Peloton stock ever recover?

A new investor or set of investors will be wasting their money. Even if they can buy shares at a discount, Peloton's business model is so flawed that the company cannot recover. Peloton's shares trade near $17, down from a 52-week high of $129.70.

Why is Peloton so popular?

The exercise startup Peloton has exploded in popularity, surpassing even the spin giant SoulCycle in customers, data from last year suggested. With a WiFi-enabled touchscreen, the bike allows you to join high-intensity spin classes remotely and, according to the company, get a studio-grade workout anywhere.

Does Amazon own Peloton?

Amazon is rumored to be preparing a bid for fitness company Peloton, but the deal would likely be a bad idea for the Seattle-based company.

Does Peloton stock pay dividends?

We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future.

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Will Peloton prices go down?

Peloton Interactive Inc. is slashing prices for its three major hardware products while boosting the cost of its subscription, part of a comeback plan that centers on generating more recurring revenue. The price of Peloton's original Bike will now be $1,195, down $300, and the higher-end Bike+ will drop $500 to $1,995.

Is Peloton undervalued?

Wall Street's analysts' consensus price target suggests that Peloton's shares are undervalued, but I disagree. The average sell-side analyst target price for PTON is $47.65, which implies a capital appreciation potential of +78% as compared with the company's last traded share price of $26.70 as of February 2, 2022.

Can Pton bounce back?

As recently as Mar 29, hard-hit shares in Peloton (NASDAQ:PTON) appeared to be in the middle of a comeback. After hitting new lows during the middle of the month, PTON stock experienced a sharp surge, rising over 50% in a matter of weeks. Yet in recent days, this has reversed.

How much do Peloton instructors make?

How Much Do Peloton Instructors Make? Although Peloton is not officially disclosing salaries, it is believed that the instructors make $500 to $750 per class. With 10 to 15 classes taught in a week, an instructor could rake in up to $585.000 annually (52 weeks/year * 15 classes/week * 750$).

Why does Peloton stock keep falling?

Peloton stock has been dropping because of its plans to optimize production levels and lower-than-expected subscriptions for Q2 FY 2022.

What's going to happen to Peloton?

One of the stars of the working-out-from-home boom is struggling. Peloton won't go quietly, though, and is making some big changes. The company will replace the CEO and co-founder, John Foley, who will become executive chairman, with former Spotify COO Barry McCarthy reportedly set to step into his shoes.

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Who invested in Peloton?

CattertonPeloton, New York City, has received a $75 million growth capital investment from consumer-focused private equity firm Catterton, Greenwich, Connecticut.

What is the Peloton goal?

Disrupting the habit of going to the gym. One of Peloton's long-run goals is to disrupt gyms the way Amazon has disrupted retail. That's a huge market opportunity. At the end of 2019, before pandemic-related disruptions, there were 64 million individuals with a gym membership in the U.S. alone.

Where is Tonic Fitness made?

In 2019, it acquired another manufacturing company (Tonic Fitness) based in Taiwan for $45 million.

Is Peleton a stay at home stock?

That should assuage investors who may be thinking that Peleton is quintessentially a stay-at-home stock, and that sales could suffer as the economy reopens.

Is Peloton growing?

Peloton has grown its revenue by over 100% for six years in a row now. What's more, management is guiding for a seventh consecutive year of three-digit revenue growth in 2021. Despite the price premium commanded by its exercise equipment, customer orders continue to climb. Gyms are reopening across the U.S.

Who is John Mackey?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors.

The real story behind Peloton

Peloton's business really has two sides. There's the hardware business that sells bikes, treadmills, shoes, and more. This should be slightly better than a breakeven business long-term, and it fuels the larger business, but it's not where the company's real value lies.

Hardware's fall

Hardware sales, which Peloton calls connected fitness revenue, peaked in the first quarter of 2021 at $1.03 billion, which was up 140% from a year earlier. But the market saw trouble coming, and that played out with connected fitness revenue falling to $501.0 million in the third calendar quarter of the year.

Subscriptions are still going strong

Hardware sales may be down, but let's not forget that millions of people now have Peloton bikes in their homes. And from the fiscal second quarter of 2020 (calendar Q4 2019) to the most recent quarter, the company's subscriber number has grown from 712,000 to 2.49 million.

Where Peloton has to prove itself

I think the biggest flaw in Peloton's business today is its high operating costs. In the most recent quarter the company spent $622.4 million on operations, including $284.3 million on sales and marketing.

Adjusting to the new reality

Peloton grew far faster than expected during the pandemic, and is now adjusting to a more "normal" business cycle. That's leading to losses short-term, but I think Peloton can return to profitability as subscriber numbers slowly grow.

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What to know before buying a stock?

Before you buy any stock, it’s important to understand the company you’re supporting with your hard-earned dollars. You don’t want your ride with Peloton to be spoiled by major potholes. While any type of investment carries risk, investing in a younger company brings unique challenges.

What is a peloton in cycling?

In a bicycle-racing peloton, a group of riders bands together to improve performance by reducing overall wind resistance. With a fund, a group of diverse investments works together to improve performance by reducing risk.

When did Peloton go public?

But exercise enthusiast or not, you can now invest in fitness without getting off your couch. Peloton Interactive Inc., which went public in September 2019, sells exercise bikes and treadmills that stream its exercise classes.

Does NerdWallet offer brokerage services?

NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities. Whether the words "spin cycle" call to mind a washing machine or a bike probably depends on your lifestyle.

Who is Andrea Coombes?

About the author: Andrea Coombes is a former NerdWallet authority on retirement and investing. Her work has appeared in The Wall Street Journal and MarketWatch. Read more.

Does NerdWallet guarantee accuracy?

NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues.

Is NerdWallet an investment advisor?

NerdWallet, In c. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice.

Peloton Interactive (PTON)

This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.

Peloton Interactive, Inc. - Hold

Zacks' proprietary data indicates that Peloton Interactive, Inc. is currently rated as a Zacks Rank 3 and we are expecting an inline return from the PTON shares relative to the market in the next few months. In addition, Peloton Interactive, Inc.

How much did Peloton lose in Q3?

Peloton easily crushed Q3 earnings estimates on May 6, but trimmed its fiscal year guidance amid the treadmill recall. The exercise equipment maker posted a loss of 3 cents per share on revenue of $1.26 billion. Analysts expected a loss of 11 cents per share on revenue of $1.1 billion.

What company did Peloton buy?

PTON stock soared more than 12% on Dec. 22 after Peloton announced the acquisition of fitness equipment maker Precor. The $420 million deal will bolster Peloton's manufacturing capabilities and will accelerate production and delivery windows for its popular workout machines.

How much does the Peloton collection cost?

The collection was designed by a group of Peloton's top instructors and ranges in cost from $30 to $85. And in November, shares also got a boost when Peloton announced a partnership with recording artist Beyonce.

What is the Peloton game called?

Peloton is preparing to debut an in-app video game called Lanebreak. The company announced it's in the early stages of developing a rider experience that "sits at the intersection of gaming and fitness," according to a July 19 press release.

Where is the Peloton bike?

The move, which is expected in the second half of 2021, would be the company's first expansion to the Asia-Pacific region. Peloton will sell its original Peloton Bike, the Peloton Bike+ and its fitness app in stores across Australia. The fitness brand currently has locations in the U.S., UK, Canada and Germany.

When did Peloton launch its wellness program?

Adds Corporate Wellness Program. Peloton announced the launch of its corporate wellness program on June 22. The initiative makes Peloton connected fitness machines and content available to companies operating in five countries — including the U.S. — later this year. PTON stock popped 8% on the news.

When did Peloton stock close?

The stock closed 8% below the 10-week line the week of Feb. 19, which is a decisive sell signal for position traders who played the stock's run up.