Investors who have owned stocks in the last 12 months have generally experienced some big gains. In fact, the SPDR S&P 500 ETF Trust SPY total return since Oct. 26, 2020, is 33.6%. But there is no question some big-name stocks performed better than others along the way.
Peloton’s Bumpy Ride: One company that has been a horrible investment in the past year has been the interactive fitness company Peloton Interactive Inc PTON.
Peloton and other so-called stay-at-home stocks experienced a near best-case scenario when the COVID-19 breakout occurred in early 2020.
Most gyms and many public spaces people would normally use for workouts were closed, creating booming demand for at-home workout equipment and services. However, vaccine rollouts in early 2021 helped fitness enthusiasts feel confident about safely going back out into the world again.
To make matters worse, Peloton was forced to issue a complete recall of its Tread and Tread+ treadmills in early 2021 due to safety issues with the products. Peloton added insult to injury in August when the company disclosed internal controls issues that resulted in the company improperly valuing its inventory.
In fiscal 2020, Peloton generated an EPS loss of 32 cents on $1.8 billion in revenue. In fiscal 2021, that loss jumped to 64 cents per share on $4 billion in revenue. Looking ahead to fiscal 2022, analysts are expecting Peloton’s EPS losses to continue to expand while revenue growth falls.
At the beginning of 2020, Peloton shares were trading at $28.98. By the beginning of March, the stock had dropped to $27.20 after news of the virus spreading in China prompted concerns about a U.S. pandemic.
The stock ultimately bottomed at $17.70 on March 16, five days before the S&P 500 hit its pandemic low. Peloton was still trading below its 2019 IPO price of $29 on April 1 as the market began to recover.
At that point, Peloton shares took off like a rocket, generating particularly massive volume in the second half of 2020. The stock hit $50 in June and $100 in September.
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Peloton In 2021, Beyond: In January 2021, Peloton shares hit a new all-time high of $171.09 just as the vaccine rollout began. At that point, investors may have begun taking profits on the huge run in anticipation of economic reopenings weighing on Peloton's sales growth.
The stock pulled back to as low as $80.48 in May 2021 following the recall news but has since recovered to around $96.60.
Peloton investors who bought one year ago and held on missed out on the big COVID-19 move. In fact, $1,000 in Peloton stock bought on Oct. 26, 2020, would be worth about $789 today.
Looking ahead, analysts are expecting Peloton's stock to rebound once again in the next 12 months. The average price target among the 27 analysts covering the stock is $130, suggesting a 34.5% upside from current levels.
Photo: Courtesy Peloton.
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