Peloton Interactive Stock (NASDAQ:PTON): Believe the Hype or Downhill from Here?

Wednesday, June 17, 2020 | Sean Sechler
Peloton Interactive Stock: Believe the Hype or Downhill from Here?

Whenever a new IPO hits the market, you can typically expect a volatile first few months of trading. This was true for Peloton Interactive (NASDAQ:PTON), a company that provides a unique and interactive fitness platform. However, after Peloton’s stock price stabilized after taking a beating in the March coronavirus selloff, the company has been rewarding patient investors with nice gains. The company is currently trading around its 52-week highs and has some nice momentum working in its favor.

We know that the global health crisis is affecting certain businesses more than others, and this is particularly true for gyms. We’ve already seen major gym chains like 24 Hour Fitness file for bankruptcy and it’s likely that more of those businesses will follow suit. This is a trend that works directly in Peloton’s favor, and investors are picking up on the fact that gym-goers still want to maintain their fitness without having to risk their health at physical gym locations. Is Peloton stock poised for continued growth or will the stock price fall downhill from here?

Home Workout Trend Here to Stay

If you haven’t already noticed, there are certain stocks that always seem to rise whenever the overall market falls on fears related to a second wave of coronavirus. Peloton is one of those stocks, which is a big reason why you might want to consider adding shares. It remains to be seen if the gym business will ever be the same, and if cases of COVID-19 do end up spiking upwards, Peloton shareholders can expect more gains.

The company is the largest interactive fitness platform in the world that has built up a loyal client base of 2.6 million members. Part of Peloton’s success has to do with the variety of different high-quality remote fitness classes that are available to its subscribers. Traditionally, the words convenience and workout were not associated with each other, but this business is quickly changing that notion. Peloton’s huge selection of remote fitness classes that are available to its subscribers at any time is helping people stay fit from the safety and comfort of their homes.

Solid Earnings Growth

When it comes to investing in companies that recently went public, it is vital to look at the financials before considering an investment. It’s common for newer companies to report net losses as they scale their business and invest in growth, which has been the case for this company thus far. However, Peloton reported impressive earnings growth in May with Q3 revenue growth of 66% and a surprise Q3 Adjusted EBITDA figure of $23.5 million that sent shares higher the day after the earnings release.

Another impressive thing about Peloton’s most recent earnings release is that the company has seen rapid growth in the company’s paid digital subscriber numbers. Connected fitness subscribers, which are people that have purchased a Peloton bike or treadmill, grew 94% while paid digital subscribers grew 64% in Q3. Subscription-based revenue is great because it makes it easier to predict things from a financial and operational standpoint for a company. It remains to be seen if those numbers continue their rapid ascent, but the fact that Peloton’s management team increased its FY2020 guidance tells us that the demand for their products and services is steady.

Niche Market & Strong Brand

Sometimes, the most successful companies become industry-leaders not by offering the cheapest products or services on the market, but by catering to a specific niche market and establishing a strong brand. That is exactly what we see happening with Peloton Interactive, and it’s working in the company’s favor thus far. Buying a Peloton Bike or Peloton Treadmill will set you back $2,245 and $4,295, respectively. These products cater to a premium fitness niche market, but that hasn’t stopped them from selling their products.

By targeting fitness lovers that want premium products and services, Peloton is establishing itself as the leader in interactive fitness. For those that don’t want to buy the bike or treadmill, Peloton still offers an attractive $12.99 per month membership that allows them to access thousands of different on-demand workouts. By offering higher pay for fitness instructors, Peloton attracts some of the brightest trainers in the industry to lead their classes. The bottom line here is that the Peloton brand is strong and providing a unique experience for its niche customers along with attracting people that just want a convenient way to workout at home.

Looking Sharp

Peloton Interactive stock has been on a nice run and there’s a good chance the upward momentum continues in the coming months. This company’s unique products and stellar customer experience make it worth a look should the stock price take a significant dip in the coming months.




Featured Article: FTSE 100 Index

7 Electric Vehicle (EV) Stocks That Are Ready to Rebound

The electric vehicle (EV) sector was nearly as frothy as the “pandemic stocks” in 2020. It wasn’t that the EV sector was dormant during the Trump administration.

But, as the saying goes, elections have consequences. And Wall Street understands they can make money in any administration. And as a bet that Joe Biden would win the presidency, electric vehicle stocks soared.

For starters, the Biden administration has already said it will prioritize climate change like no administration ever has. And one way they are going to do that is to incentivize the production and purchase of electric vehicles.

And to take advantage of this shift towards electric vehicle stocks, many private companies raced to get in on the action. The preferred way for many of these companies to go public was via a Special Purpose Acquisition Company (SPAC). A SPAC is basically a shortcut to the traditional IPO process.

However, what goes up frequently goes down and since late February, EV stocks have been getting battered. But this is creating an opportunity because the electric vehicle is still supposed to see exceptional growth over the next five years.

To help you take advantage of this we’ve created this special presentation that includes seven stocks that appear to be ready to take the next leg up.

View the "7 Electric Vehicle (EV) Stocks That Are Ready to Rebound ".

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security. Learn more.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research. As a bonus to opt-ing into our email newsletters, you will also get a free subscription to the Liberty Through Wealth e-newsletter. You can opt out at any time.