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Spin classes weren’t novel and working out at home certainly wasn’t new, but Peloton kicked off a revolution of sorts when it brought spin classes into homes in 2012. And it’s not just customers who are eager to get their hands on the distinctive black and red bikes that retail for $1,500 and up. Investors have been eager to take Peloton shares for a ride, even despite some missteps, and the stock has soared more than 70% since its debut.
The New York-based fitness company has branched out from exercise bikes into treadmills (or, “tread,” in Peloton lingo) on its way to a market capitalization that’s currently more than $14 billion. Fitness equipment is just part of Peloton’s business model. The company’s full name — Peloton Interactive Inc. — alludes to the interactive element that has more than 6 million members around the world hopping on a Peloton Bike or a Tread for an at-home workout.
Peloton was among the companies that benefited from the Covid-19 pandemic, as people who couldn’t go to gyms instead bought a Peloton bike or Peloton tread. Sales surged a whopping 172% in the company’s fiscal fourth quarter of 2020. However, it’s been a bumpy ride both for the company and its stock more recently: Peloton voluntarily recalled both models of treads and overall sales have stalled amid the re-opening of the economy and as people return to gyms. In turn, Peloton shares have slumped about 70% in 2021, and are back to pre-pandemic levels. To some investors, that selloff makes Peloton more appealing once again. Here’s how to decide if you should take investing in Peloton for a spin.
Peloton stock (PTON) fundamentals
Peloton is a relatively young company with an even younger tenure in the stock market, but it has quickly captured the attention of investors. The company launched its initial public offering (IPO) in 2019 at $27 a share, and Peloton’s share price quickly pedaled higher. In 2020, the stock surged more than 430%. Pelton has yet to be added to the S&P 500 index (membership depends partly on a trailing four quarters of positive earnings, which Peloton doesn’t have), but it is a member of a key benchmark for large- and mid-cap stocks, the Russell 1000 index. In late-2020, the company was added to the more exclusive Nasdaq 100 index, where it sits alongside the biggest tech companies in the market like Amazon, Apple and Tesla.
Peloton is listed on the Nasdaq stock exchange under the ticker PTON. While its connected fitness subscription business model resembles other technology companies, Peloton’s primary business …….