Peloton is on a path to penny stock status in 2023

Peloton (NASDAQ: PTON) stock price has plunged in the past four straight days as concerns for the company remained at an elevated level. The shares slipped to a low of $8, which was the lowest level since November rd. It has crashed by more than 95% from its all-time high.

Why is Peloton collapsing?

Peloton share price has crashed in the past few months as investors continue worrying for the company’s direction. After experiencing remarkable growth during the pandemic, the company has lost its momentum. People are now more open to going to their local gyms to exercise. 

The company has made several changes to its business model. It has reduced the prices of its equipment and even moved to sell them on Amazon, as we wrote here. In the past, it focused on selling its products directly to consumers. 

Peloton stock crashed this week after the company introduced a new refurbished bike program for its customers in the US and Canada. It will sell its refurbished bike for $1,145 and bike+ for $1,995. The price will be inclusive of delivery and setup. It hopes that lower prices will attract more customers, who will then subscribe to its digital products.

Peloton has also had disappointing financial results. The firm expects that its holiday quarter sales will be between $700 million and $725 million. Analysts were expecting it to make $866 million. It made a loss of $1.20 per share while its revenue of $616 million was below estimates of $637 million.

Peloton faces an uphill battle to become great again. While subscriptions are expected to rise in January as people set their New Year resolutions, it will be hard for it to maintain this growth momentum. Further, the company will likely struggle to attract more bike buyers as inflation remains at an elevated level.

Peloton stock price forecast

The daily chart shows that the PTON stock has been in a freefall in 2022. Recently, its attempts to recover hit a barrier when it retested the important resistance at $14.33. Now, the stock has collapsed below the 25-day and 50-day moving averages. It is also approaching the important support level at $6.61, which was the lowest level this year.

Therefore, the shares will likely continue falling in 2023 as cash burn continues. If this happens, Peloton will become a penny stock as it moves below $5. The bearish view will be invalidated if it moves above the important resistance at $14.33.