A few retail memes that are eligible for the collective time capsule emerged as a result of the COVID-19 pandemic. The fights over toilet paper will stick in our minds. We discovered that toilet paper and paper towels are two of the most important household essentials. We used our living rooms and bedrooms as gyms, which is a lighter note.
The time is not right to buy Peloton stock. To establish its worth, the stock still has a ways to go. Investors have historically considered the stock with the lower P/E ratio to be a good deal.
Peloton’s Controversies During a Year of Growth
For the first nine months of the pandemic, demand for Peloton’s product offerings was high, but since then, the business has struggled.
Demand and Supply Problems
Retailers, including Peloton, have experienced supply chain problems throughout the pandemic, which have slowed deliveries and infuriated customers. Customers haven’t been amused by the delays in Peloton’s case, where the price range starts at about $2,000 and goes up to more than $4,000. Social media platforms like Facebook, Reddit, and Twitter have been used by irate customers to air their grievances and raise concerns about shipping delays.
For a while, Peloton shipped its bikes internationally via air due to supply chain issues, which the company claimed tripled its transport costs.
A Product Recall During a Period of Surging Business
Just over a year into the pandemic, Peloton encountered issues with its Tread+ and Tread treadmills.
The U.S. Consumer Product Safety Commission urged users to stop using these products on April 17 in response to a warning it had issued about their safety. The commission suggested that adult users may also be at risk if they lose their balance on the treadmills given the connection between the devices and a number of dozen incidents of kids and animals being dragged under them.
The safety precautions were initially contested by Peloton. Later, the business changed course and announced a product recall. It also released an auto-locking feature through a software update and declared that it will provide a full refund on the more than $4,000 machines to customers who ask for one by November 2022 and a partial refund to customers who contact the business after that date.
Privacy Concerns
Prior to the treadmill safety concerns, Peloton had quietly addressed the serious issue of customer privacy. A security research company discovered that Peloton’s application programming interface gave anyone access to a user’s age, gender, location, weight, exercise history, and, in some cases, date of birth.
Should You Bet on Peloton’s Future?
The past year has seen Peloton encounter a number of roadblocks, and the business is still far from being in the clear. Regarding its ability to manufacture products domestically, maintain quality, and provide excellent customer service, it has something to prove. The business was aware that there was a market for high-end, connected fitness equipment for homes, though, long before the pandemic struck. Additionally, a business model with two revenue streams—equipment sales and digital memberships—was developed.
Why is PTON Spiking?
Peloton stock has been performing well in February primarily as a result of two factors: (1) an activist investor who has asked the board to fire the CEO; and (2) growing rumors of an acquisition, including those involving major tech companies like Amazon and Apple.
Undoubtedly, some hope for a business turnaround may have contributed to the bullishness, especially after Peloton revealed its restructuring strategy. However, given that PTON is currently among the most popular tickers on Reddit, it is more likely that momentum and some retail investor FOMO have pushed the stock’s price higher.
Even a brief squeeze might have played a role in this. A notable ratio for such a large company is that 13% of the float, as reported by Yahoo Finance, has been shorted. This is another indication that Peloton might be experiencing a meme-like rally this month.
FAQs
Will Peloton Make a Comeback?
In the 2023 second-quarter recent report, CEO Barry McCarthy said, “The results for this quarter prove that the changes we are making are effective, in case you were wondering whether Peloton could stage an incredible comeback.” Peloton is making strides.
Where Will Peloton Be in 5 Years?
At the end of 2026, this market segment will generate $3.37 billion in annualized revenue if revenue can increase at a 20% annual rate for the next five years. Based on the current market capitalization of the stock, this results in a price-to-sales ratio (P/S) for the subscription business of 2 in 2026.
Will Peloton Go Under?
In an effort to attract new customers, it recently began renting out its bikes. Even though it’s a difficult act to balance, Peloton won’t soon go out of business.
