Peloton Interactive Inc. shares slipped 11.2% Wednesday, the largest drop since October, after Morgan Stanley said the fitness company’s web traffic has decelerated and may hinder future growth.
(Bloomberg) — Peloton Interactive Inc. shares slipped 11.2% Wednesday, the largest drop since October, after Morgan Stanley said the fitness company’s web traffic has decelerated and may hinder future growth.
Peloton’s web traffic fell 27% in the fiscal third quarter from the same period a year ago as the company struggled to build on the momentum it saw in the previous quarter, when it ran heavy holiday promotions, analysts led by Lauren Schenk wrote in a note, citing Similarweb data.
“Although web traffic is still above pre-COVID levels, the 2-y/y trends have continued to deteriorate, failing to find the stability needed for a return to growth, in our view,” said Schenk.
The latest data is a drag on shares of the popular home cycling company. Peloton stock surged more than 430% in 2020, when consumers flocked to in-home exercise equipment during Covid-19 pandemic lockdowns.
Shares tumbled 76% in 2021 and 78% in 2022 as high costs and bad press weighed on the company. This year, Peloton is looking to redeem itself in the eyes of investors and consumers. So far, it’s up about 28%, lifted by a partnership with Amazon.com Inc. and its fiscal second quarter results, which showed moderating cash burn and steady demand.
All eyes will be on Peloton’s next earnings release, which is slated for May 10. Morgan Stanley sees a slight upside to management’s forecasts for added subscribers, projecting about 70,000 added connected fitness subscribers versus the company guidance of 47,000 to 57,000 additions.
But despite the expected additions to net subscribers, “the material beat that bulls were initially hoping for is unlikely,” Schenk wrote.
“It is increasingly unclear where new, highly profitable demand could come from,” she added. Morgan Stanley has an equal-weight rating on shares of Peloton and a $4.50 price target.
Most of Wall Street is waiting to see what happens with Peloton. Of the analysts that cover the company, 12 have buy ratings on the stock, 14 say hold and four say now is the time to sell, according to data compiled by Bloomberg.
(Updates stock move after close)
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