What happened
Shares of Peloton Interactive (PTON 5.42%) were up nearly 9% so far this week as of market close on Thursday. The workout equipment company's stock is now down 18% so far in 2021 following a sharp sell-off in high-growth stocks back in the spring. However, over the medium term, Peloton has still absolutely trounced the market with a 320% return since the start of 2020.
Image source: Peloton.
So what
This week's move higher can be chalked up to a couple of big announcements from the company. First, Peloton revealed it's getting into the video game business. Its upcoming title, Lanebreak, will be available to owners of the Peloton Bike and Bike+, and will pair the excitement of the company's live workout classes with an interactive gaming experience. Games would seem to be a natural fit for Peloton as it tries to attract more users and keep its current subscriber base engaged.
Hot on the heels of the video game announcement came the introduction of Peloton Corporate Wellness, a new program under which it will partner with companies to offer subsidized access to the Peloton App, membership plans, and exclusive benefits for those with Peloton equipment. Early corporate sign-ups include Wayfair (W 5.23%), Samsung, and SAP (SAP 4.98%). Additionally, healthcare insurance giant UnitedHealth Group (UNH 0.88%) said it will offer up to 12 months of access to the Peloton App or up to four months of all-access membership for select members.
Now what
Video games and health and wellness partnerships bode well for Peloton's long-term success. As a reminder, the company reported year-over-year revenue growth of 141% to $1.26 billion during its fiscal 2021 third quarter, which ended March 31. The company saw a huge bump in activity due to the pandemic, but it's clearly building on its strengths to expand its network of fitness subscribers.
Trading at just 10 times trailing 12-month sales as of this writing, Peloton stock could be a real long-term bargain if it can hold onto some of its momentum as the impacts of the pandemic start to ease. Games and healthcare plan integrations could be key in helping it stay in growth mode.
