Why Peloton Stock Is Down By 3% Today

Peloton Stock Declines After Analyst Downgrade

Shares of Peloton found themselves under pressure in the last trading session of the year after the stock was downgraded by JPM Securities.

The decline in website trafic in December (on a year-over-year basis) was named as the main reason for the downgrade. Judging by the decrease in online traffic, demand for Peloton’s products was weak in the key season.

It should be noted that Peloton stock is down by more than 75% year-to-date. Investors rushed out of Peloton shares as interest in stay-at-home stocks declines and the company faced problems with its treadmill.

What’s Next For Peloton Stock?

The market has doubts about the company’s ability to grow after its initial success. Interestingly, even the recent surge in the number of new coronavirus cases failed to provide any support to Peloton stock.

Analyst estimates kept moving lower in recent months. Currently, analysts expect that Peloton will report a loss of $2.87 per share in fiscal 2022 and a loss of $0.84 per share in fiscal 2023.

The company is not profitable, so it should show strong growth. If Peloton’s growth slows down, the stock will find itself under pressure. If Peloton fails to show any growth at all, its shares will be in deep trouble.

It should be noted that tax-loss selling has likely contibuted to the weakness of Peloton stock. Some traders like to enter long positions in beaten stocks at the very beginning of the next year when tax-loss selling factor disappears and funds establish new positions, so it would not be surprising to see increased activity in Peloton stock next week.

In the longer-term, the company must prove that there is sustainable demand for its products. If the next earnings report shows that sales were weak, the stock will find itself under significant pressure.

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