Here’s Why Peloton Stock Is Soaring 10% Today

Peloton is reducing the price of its flagship bicycle and adding two new products—it’s the first major expansion for the fitness giant, which has seen its stock surge nearly 200% since the beginning of the pandemic as demand for home fitness equipment skyrocketed.

Peloton currently sells a stationary bike and a treadmill, plus a $39 monthly subscription service for live and pre-recorded classes that reached one million subscribers in May. 

Peloton will reduce the price of its current stationary bike model to $1,895 (starting Wednesday) and introduce a new $2,495 bike (available Wednesday) and a $2,495 treadmill (available in 2021); Peloton’s current treadmill model, priced at $4,295, will still be available. 

The hope is that the new, cheaper price will make Peloton’s product more accessible and the upgraded bike, which will come with a handful of new features like a screen that pivots for off-bike workouts, will capture the high-end market. 

On Friday, JPMorgan raised its price target for Peloton from $59 to $109, citing strong continuing demand for home fitness products because of the pandemic. 

Peloton’s stock jumped 10% on Tuesday morning and is currently trading at $89. 

Crucial quote

“Our goal is to be the go-to at-home fitness solution for as many people as possible,” Peloton CEO John Foley said in a statement, “and with these new product launches, we’ll be able to offer access to Peloton’s best-in-class fitness content at various price points, depending on what consumers are looking for, especially in a world where people are increasingly working out at home.”

What to watch for

Peloton reports quarterly earnings on Thursday. In the last quarter, the company reported $524.6 million in revenue, a 66% bump, and a net loss of $55.6 million. 

Tangent

Apple is also working on a digital fitness subscription service to compete with Peloton, but analysts say it’s unlikely that the new product will be able to derail Peloton’s popularity and demand, primarily because Peloton’s product includes a physical exercise machine alongside the digital product. 

Further reading

Citi Boosts S&P 500 Target, Says Federal Reserve Will Do ‘Whatever It Takes’ To Prevent Another Market Crash (Forbes)

Peloton Bike+ Adds Four Crucial Features, One Just For Apple Watch Owners (Forbes)

Earnings Preview: What To Expect From Peloton On Thursday (Forbes)

Could Competition From Apple Derail Peloton? Not So Fast, Analysts Say (Forbes) Follow me on Twitter. Send me a secure tip.

Sarah Hansen

 Sarah Hansen

I’m a breaking news reporter for Forbes focusing on economic policy and capital markets. I completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance.

Source: Forbes

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