Peloton IPO

Should I Invest In Peloton Following Its 15% Jump Yesterday?

After a harrowing number of weeks for the fitness equipment manufacturer, Peloton investors were granted a rare day in the green yesterday.

Ironically, considering how comfortable its products are, it’s not been an easy ride for Peloton shareholders in 2021. 

With a record-breaking 2020 a long, long way behind it, its stock price has been rocked by product recalls, slowing growth, and further losses. 

But what’s this? Dare I say…comeback?

Pull your brakes there, these bikes aren’t going anywhere just yet. 

Let’s not forget that less than two weeks ago Peloton’s share price dropped 35% in a single day thanks to its earnings debacle. But, things looked a lot worse prior to yesterday, as investors piled back into the stock following its announcement of a blockbuster equity offering, in which it plans to sell more than $1 billion of its common stock.

Investors are clearly happy to see the company reacting quickly to slowing sales and raising some cash in a bid to shore up its books. However, there are still a number of concerns. 

Not only is this a complete one-eighty on the company’s recent announcement that it “had no need to raise additional funds,” but it also dilutes existing shares. What’s more, stock offerings are normally pursued by companies hoping to cash in on an inflated share price — that has not been the case with Peloton, which is down 62%. There’s a whiff of desperation here. 

It’s not all doom n’ gloom though as the company is still banking on it growing subscription business, which could soon outstrip hardware sales. Plus, the holiday season ahead could be an important one. 

You can learn all about Peloton’s current difficulties in our most recent episode of the Stock Club podcast.

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