Why Peloton Stock Skyrocketed Tuesday Morning
Key Points
Peloton shares rose after launching its commercial equipment series and appointing a chief content and member development officer.
The company has taken steps in the right direction, but remains mired in a multiyear turnaround.
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Shares of Peloton Interactive (NASDAQ: PTON) raced higher on Tuesday, surging as much as 10.9%. By 2:55 p.m. ET, the stock was still up 5.9%
The catalyst that sent the fitness company running higher was two announcements of interest to shareholders.
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In a long-awaited move, the company announced the debut of its Peloton Commercial Series, delivering its "first bike and tread products engineered specifically for high-traffic gym floors." To that end, the company is launching a connected bike and a connected treadmill, which marks the first in a "series of connected cardio and strength products that merge Peloton's world-class digital content and immersive experience with Precor's industrial-grade engineering and premier service."
The other development of note for Peloton shareholders is the appointment of Sarah Robb O'Hagan as chief content and member development officer. Most recently, Robb O'Hagan was the CEO of human performance coaching company EXOS, credited with repositioning the company from a brick-and-mortar service focused on professional athletes to a full-service digital coaching platform. Robb O'Hagan also served as president of PepsiCo's Gatorade, the architect of the company's successful turnaround by concentrating on new product development.
Will it be enough?
Peloton has been bogged down in a turnaround for nearly five years, having fallen 97% since its pandemic-era peak. The company is on track to log its fifth consecutive year of year-over-year sales declines. Investors have acknowledged Peloton's tough road ahead, as the stock is selling at 0.7 times sales.
Despite taking steps in the right direction and its dirt cheap valuation, I would still "tread" carefully with Peloton stock.
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Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Peloton Interactive. The Motley Fool has a disclosure policy.
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