Why Peloton Stock Crashed Again Today

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What happened

Shares of exercise bike and treadmill maker Peloton Interactive (NASDAQ:PTON) got destroyed on Friday, plunging more than 35% in a day after beating earnings and revenues for fiscal Q1 2022 — but giving weak guidance for the rest of this year.

Peloton stock is down again this morning, falling 11% through 11:10 a.m. EST as negative reactions from Wall Street continued to roll in.

Image source: Getty Images.

So what

Wall Street didn’t pull any punches Friday, with StreetInsider.com for example recording no fewer than five separate analyst downgrades and 10 price target reductions on the stock. Today, TheFly.com is reporting one more downgrade — from Argus — and one final price target reduction — from Roth Capital — straggling in.

Curiously, though, today’s news isn’t even as bad as what we saw back on Friday. Yes, Argus cut its rating on Peloton stock to hold — but at least TheFly’s write-up on Argus’ move didn’t include comments such as the one from Stifel last week that blasted “the rapid deterioration in the company’s full year outlook” and warned that “it will take several quarters to determine a more normalized pace of growth.”  

And yes, Roth’s reduction in price target to $70 a share hurts, but at least it wasn’t as steep as the reduction to $65 at UBS, or the cut to $60 at Wolfe Research!    

Now what

It’s also worth pointing out that not everyone on Wall Street is panicking. Although Peloton’s numbers look truly awful, with net losses of $634 million racked up over the past year and nearly $1.4 billion in negative free cash flow according to data from S&P Global Market Intelligence, Needham & Co. for example cut the stock’s price target to only $105 — and maintained a buy rating on Peloton, noting, “Our forecast assumes a rebound in FY’23 as PTON is still in the early part of its adoption curve, we believe.”  

And Cowen & Co. was nearly as optimistic, reminding investors that “PTON reported solid F1Q22 results,” revenue “in line” with expectations, and better-than-expected earnings before interest, taxes, depreciation, and amortization (EBITDA). Giving the company the benefit of the doubt about the future, Cowen, too, maintained what was in effect a buy rating.

And if Cowen is right, Peloton stock that costs less than $50 today could double within a year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.