What happened
Today was another rough day for Peloton Interactive (PTON +6.72%), which saw its stock drop as much as 7.6%. Shares of the supplier of connected-fitness equipment were down 5.1% at 12:10 p.m. ET on Wednesday.
So what
The news continues to get worse for Peloton, with CNBC reporting that internal documents show that its apparel unit could be in for a disappointing year. After expecting $200 million in apparel sales in fiscal 2022, sales may be closer to $150 million. Given the up-front cost of inventory and marketing, this could end up being a money-losing business for Peloton if this report is correct.
Image source: Peloton.
Investors don't seem to know what to make of Peloton today. The company has a strong base of users who pay for monthly subscriptions, but new hardware sales have been tough as gyms have opened back up. If apparel sales don't grow, it could be a sign that the company's brand isn't strong enough to excite its existing users.
Now what
We've gotten a lot of bad news about Peloton in the last few months, but now that the stock is down over 80% from its 52-week highs, it's worth thinking about the company a little differently. This is a brand that's very strong among people who work out, and it has a steady stream of cash from its subscription business. If management can control costs and get to profitability, this could be a great workout stock over the long term. Given the stock's cheaper price, it might be a solid value for long-term investors if it can get out of its current rough patch.
