After reports on Friday (Feb. 4) that U.S. corporate giants such as Amazon, Apple and Nike were all exploring acquisitions of interactive fitness platform Peloton, fitness product maker Peloton's earnings report today is becoming increasingly important.
After friday night news, the stock surged more than 30 percent in after-hours trading. However, in Monday's Wall Street trade, the company eventually corrected its nearly 21 percent gains to close at $29.75.
The New York-based company, known for its fitness bikes and remote bike lessons, became interested in it after its stock price came under severe selling pressure.
As the home fitness boom cooled down, Peloton's stock price continued to fall for a year, and Amazon, Apple and Nike have extended an olive branch, after the epidemic led to home isolation, home fitness was once hot, completely igniting the interactive fitness platform Peloton.
But be aware that the market's sell-off in growth stocks, supply chain disruptions, and concerns about shrinking revenue and margins as customers cut spending have further exacerbated the downturn, leading to an 81 percent loss of Peloton's market value.
Peloton said in its last earnings report that it expects sales in fiscal 2022 to be between $4.4 billion and $4.8 billion, well below the $5.4 billion forecast three months ago.
Later in the year, the company is expected to report an expansion of loss per share to $1.21 for the second quarter of fiscal 2022. Reuters reported that Peloton officials said that "plans will be made to replace the CEO, cut costs and reorganize the board of directors".
Peloton's outgoing CEO, John Foley, wrote in a letter to shareholders: "We expect fiscal 2022 to be a very challenging forecast year, taking into account unusual comparisons of the same period last year, demand uncertainty in reopened economies, and widely reported supply chain constraints and commodity cost pressures."
Why did Peloton not get a good name?
The challenges Peloton face may not be achieved overnight, especially as the economy reopens and traditional gyms are growing to customers. However, Peloton's weak share price provides an attractive entry point for potential investors.
A survey of 30 analysts conducted by the US media showed that Peloton's 12-month target stock price was $47.65 per share, an increase of 60.18%.
However, the Wall Street Journal reported on Friday that Amazon had discussed a potential deal with advisers, which brought some upside to Peloton's stock. Analysts speculate that Apple could also be a potential buyer. According to the Financial Times, Nike is also considering a separate acquisition of Peloton. The reports helped the company's stock recover from its deep decline, but it's uncertain if the deal is imminent.
BMO Capital Markets wrote in a note on Sunday: "One has to ask if the brand is really too small to have an impact on the world's largest companies."
Analysts have questioned whether Peloton's roughly 2.8 million users overlap with Nike, Amazon or Apple.
Bank of Montreal added: "When Peloton's subscribers are expected to grow by 15 million to 100 million, if none of the world's most powerful companies are interested, will they look for another company that can replace Peloton in the face of declining user stickiness and demand?"
Peloton's earnings report could be disappointing again, but the fitness company struggled to keep the momentum going after the pandemic-fueled growth ended.
However, more important information could be provided if Peloton management confirmed that it was seeking a strategic partnership with a more important, deeper buyer. The news could push Peloton's stock price further.
Written by Haris Anwar
Source: Investing.com
【BT Finance Tips】This article is for reference only and does not constitute investment advice. Investors should not use this report as the sole reference factor in making investment decisions, nor should they believe that this report can replace their own judgment.
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