Exercise equipment maker Peloton (NASDAQ:PTON) suffered a bit from its own success. This left Peloton with plenty of extra production but a decline in customer interest. Now, Peloton is cutting prices, a move that’s leaving investors cold. Sufficiently cold, in fact, to send Peloton down fractionally in Friday afternoon’s trading.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
Back when the pandemic was in full swing, and people were forbidden from going to the gym by government mandate, some enterprising souls pulled the trigger on a Peloton purchase. Peloton ramped up production to meet demand…just as gyms were allowed to reopen. That left Peloton with a lot of extra production capacity in a market that had lost interest in buying a Peloton anything. So, to try and draw users back in—and hopefully get them into the secondary revenue stream of its subscription-based streaming exercise videos—Peloton is cutting prices on its Tread and Row lines.
The Tread now runs $2,995—a $500 discount—while the Row dropped $200 to match the Tread’s new price. However, Peloton isn’t just cutting prices to add value. It’s also stepping up its feature set. Users can now connect Bluetooth cadence sensors for their cycling classes when using the Android app. That’s a function that’s been available on the iOS app for years, noted the Peloton-following site Pelo Buddy, but now it’s made the jump to Android as well. That’s likely to help bring in at least a few new users that otherwise might have passed on a Peloton..but will it be enough to help the company recover?
Analysts are a bit skeptical, but only a bit. With seven Buy ratings, 10 Holds, and two Sells, Peloton is considered a Moderate Buy by analyst consensus. Further, with an average price target of $11.29, Peloton stock offers investors a 23.25% upside potential.
