Executive Back Pedal Is a Major Red Flag for PTON Stock
Source: JHVEPhoto / Shutterstock.com
Times have been tough for Peloton Interactive (NASDAQ:PTON) stock lately. Its financials have been terrible, and some high-level executives are leaving. Investors who are counting on Peloton’s deal with Dick’s Sporting Goods (NYSE:DKS) to make everything better shouldn’t hold their breath.
Remember how Peloton was a darling of the markets during the spread of Covid-19 in early to mid 2020? Back then, lockdowns forced many people to exercise at home, and Peloton was happy to provide them with pricey home-gym equipment.
That was then and this is now, however. The circumstances have changed and Peloton’s business is struggling, to the point where some high-level people are abandoning the company. All in all, it’s wise to do what these C-Suite executives have done: move on and find opportunities elsewhere.
What’s Happening with PTON Stock?
So far, 2022 has been dreadful for PTON stock as it has fallen from $35 in early January to just under $9 recently. Before you embark on a bottom-fishing expedition, be sure to check Peloton’s financial data.
If you do that, you’ll probably be deterred from making an investment in Peloton. Consider how Peloton’s financials deteriorated from the three months ended June 30, 2021, to the three months ended June 30, 2022:
- Revenue dwindled from $655.3 million to $295.6 million
- Gross profit went from $254.7 million to -$29.8 million
- Total operating expenses doubled from $556.3 million to around $1.2 billion
- Net earnings loss ballooned from $313.2 million to $1.2 billion
It’s no wonder, then, that PTON stock is in the gutter. It’s also no wonder that some executives are leaving the company. These include co-founders John Foley and Hisao Kushi; Kevin Cornils, Peloton’s chief commercial officer; Bertrand Lanciault III, the company’s head of compliance and risk; as well as Dara Treseder, Peloton’s global head of marketing, communications and memberships.
Dick’s Deal Won’t Move the Needle for Peloton
Peloton’s remaining executives can tout the company’s deal with Dick’s Sporting Goods all they want. However, the market clearly isn’t buying what Peloton’s selling. Even with the announcement of the Dick’s deal, PTON stock still plumbed fresh lows.
Sure, you might start to see Peloton’s home-exercise bikes popping up in Dick’s locations. It’s not a good fit, though. Peloton’s bikes are quite expensive, and Dick’s Sporting Goods isn’t geared toward big spenders.
Typically, a customer doesn’t think of Dick’s as a high-end fitness-equipment seller. Someone who walks into a Dick’s Sporting Goods store probably isn’t looking for a pricey exercise bike in the first place. Even if they happen to see a Peloton bike there, they will probably choose a less expensive bike from a competitor. Besides, they won’t necessarily want to pay a monthly subscription fee to Peloton.
What You Can Do Now
The Peloton-Dick’s deal isn’t a match made in heaven; it’s just a mismatch. So, don’t assume that this deal will save Peloton.
Honestly, nothing will likely save Peloton at this point. The company’s financial situation is dismal. There’s a mass exodus in progress; even the company’s co-founders are abandoning the company. Similarly, you can choose to abandon PTON stock and save yourself a whole lot of trouble.
On the date of publication, Louis Navellier had a long position in DKS. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.