Peloton Stock Tumbles as Analyst Warns Online Growth is Slowing

Shares of Peloton Interactive (NASDAQ: PTON) tumbled Wednesday after Morgan Stanley analysts warned that web traffic trends point toward slowing growth for the fitness equipment maker.

According to Similarweb data summarized by Morgan Stanley analysts led by Lauren Schenk, Peloton’s web traffic fell as much as 27% in the March quarter compared to a year-ago period.

“Although web traffic is still above pre-COVID levels, the 2-y/y trends have continued to deteriorate, failing to find the stability needed for a return to growth, in our view,” the analyst wrote in a client note.

The latest research report from the banking giant leaves Peloton stock in a difficult spot as investors prepare to hear from the company in the first half of May. Web traffic data had improved in the December quarter, however, the latest trends point towards growth deceleration.

Morgan Stanley expects the company to manage to add 70,000 connected fitness subscribers in its fiscal third quarter. If this projection is materialized, Peloton stock could outperform, given that the company guided to 47,000-57,000 net additions in the most recent earnings report. 

Still, Schenk remains cautious on Peloton stock, hence reiterating an Equal Weight rating and a $4.50 per share price target that implies a downside risk of ~55% relative to Wednesday’s closing price of $10.20.

“The material beat that bulls were initially hoping for is unlikely… It is increasingly unclear where new, highly profitable demand could come from,” Schenk added.

For the December quarter, Peloton reported a loss per share of $0.98 on revenue of $792.7 million, which compared to the average analyst consensus for a loss per share of $0.64 on sales of $710 million. 

For the previous quarter, Peloton is calling for revenues between $690 and $715 million, with the total number of connected fitness subscribers expected between 3.08 million and 3.09 million.