While the global stock market reels from the recent downturn, there are a number of hardware service stocks that are continuing to thrive during the ongoing coronavirus outbreak.
While some people might prefer to go to the gym, many now don’t have that choice with facilities closing their doors. This is why we really like Peloton (NASDAQ: PTON), which specializes in providing home fitness equipment and is the largest interactive fitness service in the world with more than 2 million members.
Peloton’s Growth Expectations
In the last quarter, Peloton increased its subscription numbers by 96% year over year. The business is also in a good position with around $1.5 billion in cash and short-term investments and zero debt.
At Peloton’s recent earnings call it was revealed revenue jumped by 77% to $466.3 million. The exercise platform has forecast revenue of $470 million to $480 million for the third quarter of 2020, and between $1.53 to $1.55 billion total for the year.
What Does Peloton’s Future Look Like?
The company needs to look closely at its affordability to customers in 2020 if it wants to attract a wider audience. Peloton’s hardware is costly, with a treadmill priced at around $4,295 and a stationary bike at $2,245. The company has stepped in the right direction by lowering its subscription plans for those who want to get involved without having the connected Peloton hardware.
Peloton has been affected by the coronavirus pandemic with its studios in London and New York closed to the public. However, it is continuing to produce content for at-home-users and has even extended its free trial from 30 days to 90 days to help out everyone self-isolating at home.
In the midst of the coronavirus outbreak, we are looking for more ways to keep our homes clean. iRobot (NASDAQ: IRBT) developed the Roomba which cleans your home via a computerized vacuum that makes its way around automatically. The hardware service business is continuing to clean up too, posting revenue of $426.8 million for the 2019 fourth quarter exceeding projections of $413-$423 million.
The company is performing well, selling more than 1,900 units in the fourth quarter of 2019, up 13.5% year-on-year. In addition, revenue from its vacuum’s increased by 7.5% on the previous year and mopping products jumped by 62.5%. However, it faces the hardship of the ongoing coronavirus pandemic that has disrupted its supply chain as much of the company’s manufacturing takes place in China. This was announced on March 23, which also resulted in the company pulling its outlook for the year. The withdrawn forecast for first-quarter revenue of 2020 was $175 million to $185 million. The company added that the coronavirus outbreak has disrupted certain iRobot sales and manufacturing supply chain activities.
How Clean is iRobots Future?
The business has big plans to expand its products with its staple vacuum set to grow arms in the near future, to create a robotic butler. Later this year iRobot also aims to release its new Terra robotic lawnmower in the U.S on a limited commercial basis. iRobot will face a number of challenges like many other businesses affected by the coronavirus. The company would benefit from finding ways to make its product more affordable for customers so it is sustainable in any economy. The company’s stock was up around 20% following the strong earnings call for its fourth-quarter of 2019. Over the last three months, iRobot’s shares fell 14.2%, but this is in comparison to the industry’s 29.7% drop. However, it is not yet known the complete impact the coronavirus shut-down will affect the business.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.
Contributing Writer at MyWallSt
Alsha is a contributing writer to MyWallSt. Alsha’s favorite stock is Shopify because not only does she enjoy a bit of online shopping, but she believes the e-commerce solutions business is going to continue making big gains.