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Why Peloton Interactive Stock Is Falling Today

By Rich Duprey – Sep 14, 2020 at 12:47PM

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The connected fitness specialist has been tearing up the stock charts this year.

What happened

Shares of Peloton Interactive (PTON 0.80%) are falling today, down 4.8% as of 12:20 p.m. EDT, following last week's moves that pushed the stock to record highs. Investors may be taking some profits off the table.

So what

The connected fitness leader reported a blowout second quarter last Thursday despite the complications caused by the coronavirus pandemic, with promises of more growth to come as it introduces new, lower-cost at-home fitness equipment.

Woman riding a Peloton stationary bike

Image source: Peloton Interactive.

Peloton's stock has tripled in value this year as lockdown orders due to the COVID-19 outbreak made working out at home a necessity.

Now what

While Peloton continues to see tailwinds from the pandemic that should continue for the rest of the year at least, with shares up over 320% in just the last six months, it's likely a lot of that anticipation for further gains has already been baked into the stock.

Pullbacks like today's modest retreat are to be expected even if Peloton's shares do continue to rise. Yet it trades at lofty valuations on numerous metrics, including Wall Street's estimates for next year's earnings, sales, book value, and free cash flow. A big drop in the stock would not be all that surprising, and may be welcomed by investors who've wanted to buy in but felt the price was just too rich.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Peloton Interactive. The Motley Fool has a disclosure policy.

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