Peloton (PTON) has spent a lot of time at the bottom of the heap. This former pandemic darling became a victim of its own success and is now starting to turn things around. Shares were up nearly 34% in Thursday afternoon’s trading following a killer earnings report and some exciting new plans to gain fresh revenue.
Basically, we know that consumers these days are a lot more price-conscious and enthusiastic about deals. Thus, used Peloton hardware is looking pretty attractive. And Peloton announced a new plan to capture that market by charging a $95 activation fee for new subscribers who bought their hardware used from someone else.
This move allows Peloton to get access to that secondary market with one of its key features: recurring subscription exercise programs. Interestingly, that part of Peloton’s business was actually up 16% against the same time last year.
Not out of the Woods Yet
While the news certainly is welcome for Peloton and its shareholders, it still represents one step out of the woods as opposed to a complete exit. Yes, Peloton beat revenue and profit estimates, which is great news, but there are some more troubling signs, like its future outlook, to consider.
This new plan to pursue the secondary market with modest activation fees and a shot at subscription income will likely help, as well as Peloton’s ongoing efforts to “…continue to optimize expenses.” But Peloton is acutely aware of “uncertainty” in the market, as it listed the broader economy as a potential headwind. Indeed, people worried about the cost of groceries and keeping the lights on are a lot less likely to pay for a Peloton subscription.
What Is the Prediction for Peloton Stock?
Turning to Wall Street, analysts have a Hold consensus rating on PTON stock based on three Buys, 15 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 16.64% loss in its share price over the past year, the average PTON price target of $4.14 per share implies 7.8% downside risk.
