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Why Peloton Stock Jumped This Week

By Keith Noonan - Jun 25, 2021 at 5:42PM

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The exercise equipment and services company is taking a new approach to broadening its customer base.

What happened

Shares of Peloton Interactive (PTON -5.48%) climbed 11.3% over the last week of trading, according to data from S&P Global Market Intelligence. The stock popped after the exercise specialist announced a new program offering discounted and complimentary services to customers through their employers. 

PTON Chart

PTON data by YCharts

Peloton published a press release on June 22 announcing the Peloton Corporate Wellness program, which will make its exercise services available to business customers and their workers at a discounted rate. The program will also offer some exclusive features. Peloton stock also benefited from positive momentum for the broader market in the week, and it closed out the period with strong gains. 

A person running on a Peloton Tread.

Image source: Peloton.

So what

With social-distancing conditions continuing to ease and gyms reopening in many regions, Peloton's value proposition has been called into question in recent months. The recent announcement of the Peloton Corporate Wellness program was a reminder that the company still has untapped avenues to growth, and investors responded by pouring back into the stock.

Now what

Despite the recent rally, Peloton still trades down roughly 29% from the lifetime high that it hit earlier this year. The stock had climbed amid strict shelter-in-place conditions during the pandemic, but it fell out of favor as gyms reopened and investors moved out of growth-dependent stocks in favor of value-oriented reopening plays. Now, it looks like investors might be warming back up to growth-focused companies.

Setting aside recent volatility and the potential for more pricing swings in the near future, Peloton Interactive has an early leadership position in its category and could be poised for long-term success. The combination of in-home exercise equipment with subscription-based workout services has a lot of promise, and it could deliver big profits if the company continues to attract new customers. 

Keith Noonan 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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