Peloton stock investors continue to have a hard time and the stock fell to $9.11 intraday yesterday which was its all-time low. The stock had outperformed markets in 2020 as investors pivoted toward the so-called “stay-at-home” stocks.

However, as the economy started to reopen investors started to pivot towards reopening plays, which led to a fall in stay-at-home stocks. Peloton was the worst-performing Nasdaq stock last year. Things are looking no better in 2022 and the home fitness equipment company has lost over two-thirds of its market cap in the year.

Peloton stock now trades at less than 10% of its 52-week high prices and the market cap has slumped to just about $3 billion. While there has been a sell-off in all new stocks, Peloton stock is among the worst performers.

Peloton stock has been in a freefall. Multiple factors are putting pressure on Peloton stock. There has been a sell-off in all stay-at-home winners. Jim Cramer believes that these former market favorites have room to fall further and might not return to their glory days anytime soon.

As for Peloton, company-specific factors have also been playing a big impact. The company’s sales have been falling while losses have swelled. It has also laid off employees amid the slump. Earlier this year, its co-founder John Foley also quit the company.

John Foley Quit Peloton amid the Turmoil

There have been several high-level departures from Corporate America over the last year. While some like Jack Dorsey of Twitter and Jeff Bezos of Amazon have willingly given up their positions, in many cases there have been forced ousters. Bed Bath & Beyond, which released its earnings yesterday also announced the exit of its CEO amid the slump in its stock. Bed Bath & Beyond stock, which was once a meme stock favorite, fell to a new 52-week low after the earnings.

Peloton has been looking at different ways to revive its growth as the once supply-constrained company now finds itself demand-constrained. It is working on a new subscription model where consumers can buy its bikes with a monthly subscription instead of the upfront payment. However, Wall Street analysts were not too impressed with the proposition arguing that it would be a logistics nightmare.

Peloton is Restructuring the Business: Would It Help?

Peloton is restructuring the business after the last few years of super high growth. It has also appointed Liz Coddington as the new CFO after Jill Woodworth stepped down. The company’s CEO Barry McCarthy admitted during the fiscal third quarter 2022 earnings that the turnaround is a long-drawn exercise.

He said, “Turnarounds are hard work. It’s intellectually challenging, emotionally draining, physically exhausting, and all consuming. It’s a full- contact sport.” He added, My goal for Peloton is to become a global connected fitness platform with 100 million Members. That’s equivalent to roughly half the world’s global gym memberships. It’s a long, long way from where we sit today. But we sit at the epicenter of technology enabled fitness, a long-term secular growth trend.”

The company has also 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 cash in order to raise cash.

Wall Street analysts have been turning bearish on Peloton and have been gradually lowering their target prices amid the changed realities. In May, however, JMP Securities said that it expects Peloton stock to rise, terming it best-in-class fitness stock. The brokerage also assigned a $25 target price to the stock

All said, so far, the bears seem to be having the upper hand and Peloton stock has continued to slide to new lows. The stock is trading lower in US premarket price action today also and looks set to continue its slump even further. All said, there are rumors that falling valuations could make Peloton an acquisition target for other tech companies, including Apple.

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