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Why Peloton Interactive Stock Popped Today

By Rich Smith - May 26, 2021 at 12:29PM

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JPMorgan steps up to support one of its favorite stocks.

What happened

Shares of exercise-at-home stock Peloton Interactive (PTON 7.50%) are racing ahead of the market Wednesday morning, rising 8.6% through 11:35 a.m. on news of an endorsement from investment bank JPMorgan.

So what

As reports today, JPMorgan already had an "overweight" rating hung on Peloton, so today's news doesn't involve an actual upgrade or a change in sentiment. Rather, JP is stepping up to support Peloton stock after other analysts cut bait when bad press over injuries (and one death) connected to use of Peloton's treadmills sparked a recall of the equipment earlier this month.

After quizzing Peloton CFO Jill Woodworth on the controversy, JP reports that the company has fixed the manufacturing issues that led to the recall and that demand remains strong for the Tread+ product despite the bad PR. JP further praises Peloton for its decision, announced earlier this week, to build its first U.S. factory (in Ohio) to help address concerns about product supply and delays in fulfilling orders.

Analyst supporting a rising stock arrow

Image source: Getty Images.

Now what

But it's worth pointing out that Rome wasn't built in a day -- and neither is a bike and treadmill factory. Although construction of and spending on the $400 million investment will begin this summer, production of new bikes and treadmills isn't expected to begin before 2023.

Rich Smith 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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