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Why Peloton Stock Powered 5% Higher Today

By Rich Smith – Aug 24, 2021 at 1:05PM

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Two analysts find reasons to like the company ahead of earnings on Thursday.

What happened

Shares of exercise bike and treadmill manufacturer Peloton Interactive (PTON -8.43%) were up 4.8% through noon EDT on Tuesday. The company is due to report fourth-quarter 2021 earnings after close of trading on Thursday, Aug. 26. But that's not the exact reason the stock is rising.  

Woman in red standing behind woman in black on an exercise bike

Image source: Getty Images.

So what

Earlier this morning, Peloton answered one of investors' major questions: It confirmed that it will begin selling a redesigned $2,495 treadmill on Aug. 30.  

The new treadmill, designed to address safety concerns about the company's prior model, the Tread+, is actually arriving more than a month later than Wall Street had predicted, Truist Financial (NYSE: TFC) says. Nevertheless, TheFly.com reports, the new Peloton Tread will arrive in time for the company to incorporate at least a month's worth of sales into next quarter's first-quarter 2022 results. And it will allow Peloton to resume advertising and boost sales of the Tread before the holiday shopping season begins.

Now what

In a separate note, J.P. Morgan says that worries about the safety of Peloton devices, combined with concerns over the longevity of the exercise-at-home trend now that vaccines are here, have shares trading down 30% from the start of this year.

J.P. Morgan is feeling a bit more conservative in its outlook on Peloton in light of these worries today. The banker also predicts that net subscriber additions to Peloton's exercise video service will be a bit weaker than previously hoped (1.05 million net additions instead of 1.165 million). Still, it believes that Peloton's discounted stock price, combined with "multiple growth drivers" once the new Tread arrives, qualify the stock for an overweight rating and a $138 price target, 23% above where it trades today.

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.

Stocks Mentioned

Peloton Interactive Stock Quote
Peloton Interactive
PTON
$11.51 (-8.43%) $-1.06

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