Peloton stock is crashing -— is it time to go all in?

 Peloton stock is crashing -— is it time to go all in?

Peloton shares crashed more than 34% to $56 on Friday after the at-home fitness player warned about slowing demand for its trademark bike and inefficiencies in its business. 

One analyst is staying upbeat on the shares, despite the report being the second straight poor showing for the company.

“While we are a bit cautious of this new guide after the last one, and will be watching demand, churn, costs, and liquidity closely, we think tonight’s share price is not reflective of what Peloton has become — a highly-scaled global wellness and media platform, and its continued growth trajectory from here, albeit flatter than the street expected, can still benefit from new regions, new products, and new technologies,” said Macquarie Capital analyst Paul Golding in a research note to clients. 

Golding reiterated an Outperform rating on Peloton’s stock (PTON) with an $85 price target.

Peloton said Thursday night that connected fitness subscribers of 2.49 million came in roughly in line with analyst estimates. The number of workouts on the platform trended lower for the second consecutive quarter.

Here is how Peloton performed versus Wall Street estimates for its first fiscal quarter:

  • Net Sales: $805.2 million vs. $810.7 million

  • Diluted Loss Per Share: $1.25 vs. $1.07

Peloton also slashed its full-fiscal year outlook. 

The company sees full-year sales of $4.4 billion to $4.8 million, down sharply from $5.4 billion previously. Peloton expected a full-year adjusted operating loss of $425 million to $475 million. The company had expected an operating loss of $325 million. 

“Importantly, we also expected the price drop to further drive a traffic uplift and increased conversion. While the price drop led to conversion rates that exceeded our forecast, overall traffic has not met our initial expectations,” explained Peloton CFO Jill Woodworth on a call with analysts.

To be sure, the bulls on Peloton were few and far between in the wake of its disappointing earning day. Analysts across the board cut their forward financial estimates, and voiced concern the new outlook wasn’t “kitchen sink.”

“Last night’s results suggest Peloton’s post-pandemic surge has dissipated, pressuring its ability to forecast, ironic as most consumer companies are now cheering visibility… a fact echoed through price cuts, as everyone flags inflation/scarcity. We worry lowered numbers remain too optimistic and that the biggest issues may actually lie ahead — in racing to meet pandemic-driven demand, the company embarked on a massive investment spree (Tonic, Precor, POP) dwindling cash and ballooning inventory just as demand tapered,” said long-time Peloton bear Simeon Siegel at BMO Capital Markets. 

Siegel reiterated an Underperform rating on Peloton and issued a $45 price target.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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