Peloton Interactive (PTON) stock price has moved sideways in the past few weeks as investors assess the company’s growth. The shares, which bottomed at $4.30 in 2023, have now bounced back to $5.82. They remain much lower than the all-time high of $171.25. The market cap of the once high-flying company has retreated to just $2.2 billion.

Core challenges remain

Peloton Interactive was once a popular name by both consumers and investors. It is a fitness disruptor that changed – to some extent – how people exercise. The company makes money by selling its hardware like bikes and trend machines. It also sells apparel and accessories.

Most importantly, Peloton Interactive has a membership program where people can subscribe to receive classes from experienced trainers. The Peloton Bike+ costs about $2,095 when new and $1,595 when refurbished. 

Its Bike costs $1,145, which is a comparable price to other exercise bikes. Tread, on the other hand, goes for almost $3,000 while Tread+ costs $5,000. 

Peloton’s management has been working to turnaround the company after going through major challenges after the pandemic. In its most recent results showed that the company’s growth was still slowing.

Revenue dropped to $595.5 million in the third quarter from $616.5 million in the same period in 2022. On the positive side, the company managed to reduce its total net loss from $408 million to $159 million. Its losses narrowed because of the thousands of layoffs it did in 2022 and early 2023. Its restructuring costs also narrowed to $17.8 million.

Peloton faces numerous challenges ahead. First, there are concerns that weight loss drugs like Ozempic and Wegovy could reduce demand. These drugs were so popular in 2023, which helped Novo Nordisk and Eli Lilly become the top performers in the healthcare industry. 

The other challenge, which analysts at Deutsche Bank noted, was that growth of its digital business will likely come under pressure in the coming quarters. The most recent results revealed that subscription revenue rose to $415 million from $412 million a year earlier. That is a relatively slow growth. 

Most importantly, its hardware business is also expected to have little or no growth in the future. Its revenue dropped from $204 million to $180 million and it is unlikely that the Lululemon partnership will help.. Therefore, I suspect that Peloton will continue being a slow growth company in the coming years.

Peloton stock price forecast

(Click on image to enlarge)

PTON chart by TradingView

The PTON share price has been under pressure in the past few years. The stock recovered modestly after its last financial results. Recently, the shares have formed a rising wedge pattern, which is a bearish sign. It remains below the 100-day Exponential Moving Average (EMA).

The Relative Strength Index (RSI) has turned downwards and moved below the neutral point. Therefore, the outlook for the shares is bearish, with the next point to watch being last year’s low of $4.30. 

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