Peloton stock takes a crash

By: Shane Weston

November 7th, 2021

Covid-19 presented excellent growth for many companies that were well suited for the pandemic, but has the momentum begun to slow down? Peloton (PTON), one of the major leaders in the at-home fitness equipment industry, would agree after its companies earnings report. On Friday, the stock tumbled 35% and cut its yearly sales forecast by as much as $1 billion.

After the collapse, four investment banks lowered their price targets. Truist Securities changed from its previous buy grade to a hold. While its price target was originally at $130, but has now been set at $68. J.P. Morgan also changed from $138 to $90.

The economic recovery is the leading cause on the company's third quarter earnings report. The team at Evercore stated, "Essentially, the company mis-forecasted the magnitude of the impact from reopening economies (and the resulting reduction in consumer demand), ongoing supply-chain constraints, cost inflation, and logistics challenges when they initially provided FY’22 guidance last quarter." It is understandable for the company to be impacted by these factors, but they may not be short-term issues. Pelotons CEO, John Foley, hopes to recover from this by expanding into international markets and establishing new hardware.

Peloton's crash may be the start of shortcomings for the "pandemic play" stocks. There were a number of companies that played into the hands of the pandemic, but with the economic continuing to open up, we may see a decrease in revenue for these companies over the quarter three and four earnings report.