Peloton Interactive Share Price Forecast August 2021 – Time to Buy PTON?
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Shares of American exercise equipment and media company, Peloton Interactive (NASDAQ: PTON) are in the red today after closing at $114.09 on 27th August (4:47 am GMT-4). Peloton shares suffered this fate after the company released a disappointing sales outlook for this current quarter. The company has warned that increasing commodity costs and lower prices for its most popular video-connected exercise bikes would negatively hamper its profitability.
Peloton Interactive – Technical Analysis
According to Peloton Interactive’s financial statement, the market cap is at $34.032 billion with total assets worth $4.712 billion. Revenue for 2020 was at $1.83 billion with a profit margin of -3.92% compared to revenue of $915 million in 2019. Revenue rose 54% to reach $937 million in the 4th quarter ending June 30th, topping analysts’ expectations of $927 million.
Moving averages such as Exponential Moving Average (10)(112.49), Simple Moving Average (10)(111.13), Exponential Moving Average (20)(113.64) and Simple Moving Average (20)(113.96) are pointing towards buying. On the other hand, oscillators such as Stochastic RSI Fast (3, 3, 14, 14) (87.48), Williams Percent Range (14)(−42.74), Bull Bear Power(8.41) and Ultimate Oscillator (7, 14, 28)(46.62) are all neutral.
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Recent Developments
The forecasts released by the company indicated revenue of $800 million in its 1st fiscal first-quarter ending on September 30th. This missed initial expectations of $1 billion. Because the high prices of its bestselling bike product was a barrier to consumers, the company decreased the price by $400 to $1495. The company had warned beforehand about the decrease in profitability, citing the price decrease, significant increases in commodity costs, freight rate increases and investments in marketing and new products.
PTON shares declined by 14% in after-hours trading, before recouping some losses, trading 6% lower. All of these are signs that the revenue growth of the company has cooled in its fiscal fourth quarter. The company which enjoys a cult-like position in the fitness community benefited from the growth of increased exercising during the pandemic. However, many consumers are starting to return to gyms and take part in outdoor activities as pandemic restrictions loosen and the weather becomes warmer. Fitness rivals such as Mirror and Hydrow are also putting pressure on the company.
The company has been busy forging partnerships in 2021, such as that with UnitedHealth, the popular web series Verzuz and Adidas just to name a few. The company also announced a deal with Beyonce in November which includes a donation to students of historically Black colleges and Universities.
Should You Buy PTON Shares?
There are some worrying statistics that investors should consider before they buy PTON shares. Average workouts per subscriber went down to 19.9% from 24.7% a year ago in the most recent quarter, despite total workout volume growing 75% to reach 134.3 million. It suffered a net loss of $1.05 per share. The move to decrease the price of its landmark Peloton Bike was largely unexpected as the company was having problems filling orders at a higher price point as well.
However, the long-term outlook of the company remains compelling despite all the hiccups. While earnings estimates are forward-looking, the technical picture is not so pretty. The company is trying to woo subscribers desperately. Even if it pays off the company still has the mammoth task of keeping those customers loyal. So investors will be better off avoiding these shares for the time being.
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