peloton

Peloton stock (NYSE: PTON) fell to a new all-time low of $6.82 yesterday before recovering slightly before the market closed. While the company has taken several steps to turn around the business, the stock has failed to rebound and has been falling to new lows.

Yesterday, Peloton announced a partnership with Dick’s Sporting Goods to sell its equipment through its retail stores and e-commerce platform.  The rollout of the scheme is expected early in the upcoming holiday season and Dick’s Sporting Goods would sell products including Peloton Bike, Bike+, Tread, and Guide.

Peloton said that outside of its own sales channels, Dick’s Sporting Goods would be the only retail company to carry such a wide inventory of its products. Commenting on the partnership, Peloton said, “The collaboration is the latest effort by Peloton to reach new audiences, expand its total addressable market and drive Member growth, by having its products available at the largest U.S. sporting goods retailer.”

It added, “It will expand Peloton’s U.S. geographic footprint and complement its retail presence, as the company pivots to growth, in the next phase of its transformation journey.”

Peloton Partners with Dick’s Sporting Goods to Sell Its Equipment

Notably, Peloton used to sell its equipment solely through its own retail and e-commerce channels. However, as part of the transformation, it has started to partner with third parties. Last month, it announced a partnership with Amazon to sell its equipment on its e-commerce platforms.

Amazon has announced a second Prime Day of 2022 which would be held next month. The e-commerce giant listed Peloton as among the brands on which buyers can expect good deals during the event. Amazon stock has crashed amid the broader market turmoil, but Wall Street is overwhelmingly bullish and most analyst rate Amazon stock as a buy or equivalent.

Peloton is Restructuring Its Business

Peloton has taken several steps to turn around the business. It scrapped the Ohio factory, where it was set to invest $400 million to manufacture products in the US. The company would now be selling the plant in order to raise cash.

Peloton has also exited the manufacturing business and has moved fully to third-party manufacturing. It has also opted for third-party logistics to reduce costs. It is working to preserve cash and is looking to become free cash flow positive in the back half of the 2023 fiscal year.

While PTON stock has plunged, many analysts continue to remain bullish and have maintained their buy rating on Peloton stock. JPMorgan is bullish on PTON as the company transitions from a fixed to a variable cost structure. Notably, while Peloton’s equipment sales are coming down, its subscription revenues are rising.

It posted subscription revenues of $383.1 million in the most recent quarter which was ahead of the $295.6 million that it got from product sales – it was the first time in the company’s history that its subscription revenues surpassed product sales.

PTON Stock Falls to a New All-Time Low

Peloton has also been losing key executives. Its co-founder John Foley, who quit as the CEO earlier this year has also quit as the chairman. While the company has taken several steps to restructure the business under the new CEO Barry McCarthy, the stock’s price action has disappointed.

While there have been brief rallies as we saw last month after the Amazon partnership, they have quickly faded away and the stock has continued to slump to new lows.

Peloton has been looking at different ways to revive its growth as the once supply-constrained company now finds itself demand-constrained. McCarthy has been quite unequivocal in saying that corporate turnarounds are not easy. In the meanwhile, PTON stock has continued to sag and has now lost 92% from its 52-week highs.

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