A Peloton stationary bike.
Adam Glanzman/Bloomberg
Peloton Interactive stock can’t catch a break.
After showing some signs of life earlier this week, shares slid to their lowest levels in a year on Friday following an analyst downgrade. An unfortunate bit of product placement in the new version of Sex and the City didn’t help.
Shares of Peloton Interactive closed down 5.4% to $38.51 on Friday, their lowest close since May 6, 2020. The stock is down 75% year to date, and was the second-worst performer in the Nasdaq 100 on Friday. Shares closed down in five of the past six days
Credit Suisse analyst Kaumil Gajrawala cut his rating on the stock to Neutral from Outperform and lowered his target for the price to $50 from $112 in a research note on Friday. He pointed to a rise in interest on spending on activities that weren’t possible during the pandemic, as well as the reopening of gyms and other in-person fitness options, as headwinds the firm faces following a blowout 2020.
“Consumers appear fixated on reopening themes and purchases with an unclear timeline for normalization,” Gajrawala said. “Over the next year, we think these factors increase the likelihood of a no-to-low growth” fiscal 2022.
Gajrawala argued the company will need to spend more on marketing and boost discounts to counter slowing demand.
“Given the shift in consumer focus (reopening), we expect a lower return on marketing, pushing acquisition costs above pre-pandemic levels,” he wrote. “Hardware margins appear structurally lower and may no longer allow equipment gross profit to offset” the customer acquisition costs.
It wasn’t just the Credit Suisse downgrade weighing on sentiment regardng the stock. BMO Capital Markets analyst Simeon Siegel issued a spoiler alert, writing in a research note that in the reboot of Sex and the City, titled And Just Like That…,Mr. Big, portrayed by Chris Noth, suffers a heart attack and dies after using a Peloton.
A Peloton representative didn’t immediately respond to a request seeking comment on the product placement, but a spokeswoman told The Wall Street Journal the company didn’t know a post-Peloton death was coming.
Dr. Suzanne Steinbaum, a cardiologist on Peloton’s health and wellness advisory council, said in a statement provided to the Journal that the character “lived what many would call an extravagant lifestyle—including cocktails, cigars, and big steaks—and was at serious risk.”
Siegel, who has been a Peloton stock skeptic, rates the stock at Underperform with a $45 price target.
“Although unlikely to impact sales, it does question whether PTON is losing degrees of control over its storytelling, perhaps its greatest achievement to date,” Siegel wrote.
Last week, Deutsche Bank initiated coverage on Peloton at Buy, with a price target of $76 a share, though it noted that the stock required “patience.”
Since Peloton went public, it has been a battleground stock. Prior to the pandemic, short sellers argued the company’s valuation was inflated, while bulls said Peloton was more than a fitness fad due to its strong branding and streams of recurring revenue. Although demand soared in 2020 amid the pandemic, shorts argued the stock would return to Earth.
For now, the shorts are winning.
Corrections & Amplifications: Chris Noth plays the character of Mr. Big in the remake of Sex and the City. An earlier version of this article incorrectly identified the actor as John James. Mr. Big’s full name in the series is John James Preston.
Write to Connor Smith at [email protected] and Joe Woelfel at [email protected]
