Peloton (NASDAQ: PTON) is a go-to option for people wanting to keep in shape while most gyms around the world are closed because of the coronavirus outbreak. The company is known for its bicycles and treadmills and now its live-streaming fitness classes are taking off. Last month the stock climbed by more than 6% after it streamed its biggest class ever with at least 23,000 people taking part from home.
How has Peloton performed since its Initial Public Offering?
The digital fitness stock has not experienced a huge change in stock price since it went public in September 2019 at $29 per share. Within a week, that price had dropped to $25.24. Almost 8 months on and the stock is trading at just under $33. However, over the past month, the stock has gone up by 14.6% which is a clear indication that many people are wanting to use the product because of the coronavirus lockdown.
Has the Coronavirus accelerated growth?
Peloton initially positioned itself as a purchase for those who are looking for luxury equipment, with the price tag of a treadmill coming in at $4,295 and a bike costing $2,245. But since the virus outbreak, the company has been able to attract a wider range of people who want to exercise in the comfort of their own homes through its digital classes that are subscription-based.
However, while subscriptions are expected to accelerate during this volatile time, Peloton was forced to close its retail stores in mid-March. Then its live production of classes was paused when an employee tested positive to COVID-19. These have since resumed.
During Peloton’s second-quarter earnings report, the company’s revenue grew by 77% to $466.30 million. Peloton is expected to post revenue of between $470 and $480 million when it announces its third-quarter earnings this week. As for subscriptions, between 843,000 and 848,000 is expected. The fitness platform currently has over 500,000 paying subscribers, with a retention rate of more than 90%.
What is the potential for Pelton’s stock?
The stock is currently not turning a profit and reported a loss of $191 million in 2019. Analysts also predict we might not see a profit from Peloton until 2024 at the earliest. But on the plus side, since the pandemic, the company has been offering 30-day free trials and flexible financing options. This move will hopefully get more people to continue using the platform, even once gyms reopen as it will be a more affordable option.
As for the company’s next move, the opportunities are endless. Peloton now has a firm grip on its hardware, software, and media content. It’s likely the business will expand to international markets and seek out new instructors. However, competitors are starting to create similar products to the fitness hardware giant that is more affordable.
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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.