Peloton stock price forecast as the firm changes strategy

on Apr 15, 2022
  • Peloton stock price has been in a major sell-off.
  • The company unveiled a new strategy this week.
  • It will now focus more on the subscription business.

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The Peloton (NASDAQ: PTON) stock price has been in a relentless sell-off in the past few months as concerns about the company’s future remain. The stock has dropped to $23.87, which is close to its all-time low of $19.70. It has tumbled by over 86% from its highest level on record, bringing its total market cap to about $7.9 billion.

Peloton strategy shift

Peloton Interactive was one of the best winners during the Covid-19 pandemic as more people embraced at-home exercises. As a result, the Peloton stock price jumped to an all-time high and its total market cap jumped to over $30 billion.

However, the pandemic also led to new mistakes by the company. As demand rose, the company boosted its inventories. As growth slowed, the company was left holding thousands of bikes and treadmills. 

Now, the company is changing its business model in a bid to focus more on subscriptions. In an announcement, the firm said that it will reduce the size of its bikes to $1,440, including delivery fee. That will be a discount considering that these products were previously selling for $1,745.

In addition, the firm said that it will boost its monthly subscription price from $39 to $44. This package includes more metrics and on-demand classes. On the other hand, the mass-focused package will remain at $12.95. 

The announcement came after Blackwells Capital insisted that the company should explore strategic options like a sale. It argued that the firm had not made any changes since the appointment of the CEO.

While these changes are welcome, they present substantial risks to the company. For one, a $44 monthly subscription is not cheap, which means that there will be churn. Also, the pricing risks turning off potential customers. For example, a Mirror subscription package is $39. 

Peloton stock price forecast

peloton stock price

The daily chart shows that the PTON stock price has been in a strong downward trend in the past few months. The stock has moved below the 25-day and 50-day moving averages. A closer look shows that it is sitting near its all-time low while its volatility has eased. 

Therefore, there is a likelihood that the Peloton stock price will keep falling as bears target the next key support level at $20. A climb above $30 will invalidate the bearish view.