Why Peloton Stock Is Down By 4% Today
Key Insights
- Peloton reveals Peloton Guide pricing, which is lower by 40% compared to previous expectations.
- Takeover rumors have not materialized, which hurt Peloton stock.
- Lower pricing suggests that demand for Peloton products is weaker than expected.
Peloton Stock Declines As Peloton Guide Pricing Disappoints
Shares of Peloton gained downside momentum after the company announced that its strength training product Peloton Guide would be sold at a starting price of $295.
Previously, the company planned to sell Peloton Guide at a starting price of $495, so the new price is lower by about 40%.
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Not surprisingly, Peloton stock found itself under material pressure after the news was released. However, the losses are limited as the market remains focused on the company’s M&A potential, which has pushed the stock away from lows back in February.
What’s Next For Peloton Stock?
Analysts expect that Peloton will report a loss of $3.93 per share in the current year and a loss of $1.05 per share in the next year, so the company is not expected to return to profitability in the near term. In addition, analyst estimates have been moving lower in recent months, which was bearish for the stock.
Takeover rumors were the only catalyst behind Peloton’s rally in February. However, real bidders have not materialized, and the market begins to question whether a buyer could emerge anytime soon.
The recent news on Peloton Guide pricing could serve as a longer-term negative catalyst for Peloton stock as it shows that demand for the company’s products is not as strong as expected.
The pandemic is over in the minds of many potential customers, and it remains to be seen whether Peloton will be able to find sources of real growth in the post-pandemic world.
At this point, potential takeover rumors are the catalyst which could keep the stock afloat, but it is not clear if this catalyst will be sufficient enought to push Peloton stock higher in case any potential buyer does not show up in the next few months.
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