Peloton share price forecast after weak Q1 results

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Nov 6, 2021
  • Peleton reported weak Q1 results
  • Peloton shares have weakened nearly 40% last trading week
  • $50 represents current support

Peloton Interactive, Inc. (NASDAQ: PTON) shares have weakened nearly 40% last trading week, as the company reported weaker than expected first-quarter results on Thursday.

Peloton reduced its guidance for the 2022 fiscal year

Peloton Interactive is an American exercise equipment and media company that produces internet-connected stationary bicycles and treadmills that enable monthly subscribers to remotely participate in classes via streaming media.

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Peloton reported weaker than expected first-quarter results on Thursday; total revenue has increased by 6.2% Y/Y to $805.2 million, which was less than expected, while the GAAP EPS was -$1.25 (missed by $0.17). John Foley, CEO of Peloton Interactive, said:

With reduced backlogs, our visibility into our future performance has become more limited. From forecasting consumer demand to accurately predicting logistics costs, our teams have never seen a more complex operating environment in which to guide our expected results this year.

Peloton reduced its guidance for the 2022 fiscal year due to consumer behavior coming out of COVID, the impact of its original bike price reduction, and the cost structure within the Connected Fitness segment.

During its first-quarter earnings report, its management said that a full-year revenue forecast stands at $4.4 billion to $4.8 billion, which still represents a 14% growth compared with the previous fiscal year.

J.P.Morgan sees potential risks for the upcoming quarters mainly due to inflation, but the company’s management announced that Peloton is prepared for unexpected conditions.

The company’s management has already taken corrective actions to improve the profitability outlook, which will certainly impact the back half of the fiscal year 2022 and into the fiscal year 2023.

Positive information is that connected fitness subscriptions grew 87% to 2.49 million during the first fiscal quarter, while paid digital subscriptions grew 74% to 887 thousand. The original Bike price reduction accelerated sales, and the company recently passed a significant milestone, over 1 billion classes taken by its members.

Peloton saw a positive reception to the price moves in its international markets as international consumers have proven to be more price sensitive.

Peloton is in a good position to grow its business, but this stock is not undervalued with a $26 billion market capitalization. The company is still not profitable on a fiscal year basis, the book value per share is around $5.8, and there are better long-term investment opportunities at the moment.

Bears control the price

Data source: tradingview.com

Peloton shares have weakened nearly 40% last trading week, and according to technical analysis, the bears remain in control of the price action. Falling below $50 supports the continuation of the negative trend, and the next price target could be at $45.

On the other side, if the price jumps above $60, it would signal to trade Peloton shares, and we have the open way to $65.

Summary

Peloton shares have weakened nearly 40% last trading week, as the company reported weaker than expected first-quarter results on Thursday. Peloton reduced its guidance for the 2022 fiscal year, and according to technical analysis, the bears remain in control of the price action.

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