What happened
Shares of Peloton Interactive (PTON -2.24%) were up 16% as of 11:40 a.m. ET on Tuesday after the company announced an "industry-first" partnership with Hilton Hotels that will bring Peloton Bikes to all 5,400 Hilton-branded hotels in the U.S.
Also driving the stock higher today were lower interest rates in the bond market. Higher bond yields have made stocks trading at high valuations look more expensive, which has weighed on Peloton's stock price. Year to date, Peloton shares are down 77%.
So what
Peloton has made several announcements over the last month following the departure of co-founders John Foley and Hisao Kushi on Sept. 12. The new Peloton Row was announced on Sept. 20, which will officially start shipping to customers in December. The company also announced a partnership with Dick's Sporting Goods to give more people firsthand experience with Peloton's connected fitness products.
Peloton has faced slowing demand in recent quarters. Revenue declined 30% year over year in the most recent quarter, and there's no guarantee the recent announcements will lead to an immediate turnaround. In 2021, Peloton unveiled a corporate wellness push, a partnership with UnitedHealth Group, and the launch of a new strength product, Peloton Guide, but those developments couldn't keep the company's momentum going coming out of the pandemic. Investors shouldn't expect magic results from the Hilton announcement either, especially in this economy.
Now what
For now, the biggest near-term catalyst for Peloton's stock price is an end to rising inflation, interest rates, and the U.S. dollar. These obstacles have made buying things more expensive in 2022 and sent growth stocks plummeting.
The end of these economic headwinds would be a huge relief for Peloton's prospective customers and quicken the company's turnaround efforts.
