What happened

Shares of Peloton Interactive (NASDAQ:PTON) were gaining today, jumping after the stock got a bullish note from an analyst and rose for the second day on a row on the perception that lockdown-style conditions will be a boon for its business.

As a result, shares of the interactive exercise-equipment maker were up 9.2% as of 1:30 p.m. EDT on Tuesday.

A woman riding a Peloton bike

Image source: Peloton.

So what

Peloton was one of the few stocks to gain on Monday as lockdown-style conditions were implemented in places like the San Francisco Bay Area, calling for residents to only leave their homes for essential purposes. Today, the stock rose again after Wedbush analyst James Hardiman added it to his Best Ideas list, citing an ongoing shift from gyms and health clubs to at-home fitness products. He also said the company could benefit from the social distancing that's becoming the norm across the country.

But it hasn't all been good news for Peloton. The company said it has closed its studios in New York and London to the public, though it would continue to produce live content for at-home users, which is its prime business. It also said its showrooms will be closed for the next two weeks, and it's extended its free trial from 30 days to 90 days as a favor to people stuck at home. 

Now what

Peloton does seem likely to benefit from people being cooped in their homes during the pandemic since Americans still want to exercise and are searching for stress relievers and distractions. Right now, the outbreak seems to be affecting the wealthier parts of the country, like San Francisco, Seattle, and New York, which figure to include the top customer base for a company selling $2,200 exercise bikes.

But investors should remember that this is only a temporary condition, and though we don't know how long it will last, when the outbreak fades, Peloton may be at a disadvantage. We'll likely be in a recession, meaning consumers will be purchasing fewer luxury items like high-end exercise equipment, and Americans will be desperate to get out of their homes and restart a normal life. That means they'll likely flood gathering spots like restaurants and seek community with in-person exercise classes. Or even just some fresh air with a bike ride outside. 

Peloton is still an unprofitable company, and it could be looking at a significant risk when social distancing is longer necessary.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.