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March 29, 2020, 11:43 a.m. EDT

Peloton is ‘clearly benefiting from global quarantines,’ new data show

An Evercore analyst is upbeat about Peloton’s momentum now that more people are exercising from home

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By Emily Bary

Shawn Hubbard/Peloton
Peloton makes expensive at-home exercise equipment and offers digital workout subscriptions.

With many gyms closed due to the COVID-19 pandemic, people are increasingly turning to at-home exercise and that seems to be helping Peloton Interactive Inc. raise its profile.

The trendy maker of fancy spin bikes and treadmills also has an app for yoga and other workouts, and the company decided to offer that as a free 90-trial after the novel coronavirus outbreak began forcing more people to stay indoors.

New data indicate that the digital offering is catching on quickly, according to Evercore ISI analyst Lee Horowitz. March downloads of the Peloton /zigman2/quotes/208035743/composite PTON +8.38%  app are up five times relative to the company’s February run rate, he said, based on a review of third-party app data from Sensor Tower.

“We are seeing Peloton subscriber growth and engagement clearly benefiting from global quarantines,” he wrote.

Read: As the coronavirus pandemic forces a business paradigm shift, here are the stocks to watch in the new economy

While usage of the digital-only app is free to start with, the hope is that some of these users will stick around and become paying users once their trials expire. Horowitz also argues that Peloton could be seeing lower churn from existing paid users on services now that customers have fewer exercise options outside the home.

Don’t miss: Here are the new ‘best ideas’ stocks at Wedbush during COVID-19 pandemic

“We do not discount the fact that a sustained global recession could put significant pressure on consumer’s discretionary budgets, and thus weigh on Peloton gross additions,” he wrote. But he estimates that the company has already picked up about 80% of its gross additions for this fiscal year that ends in June, and he’s encouraged that the company hasn’t altered its March-quarter or full-year outlook yet.

Read: First-half earnings are a bust as coronavirus stops companies in their tracks. Will the second-half be better? It depends

Horowitz rates Peloton’s stock at outperform with a $34 target. The stock is up 4.8% in Thursday’s session and it’s lost 12% over the past month as the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.51%  has dropped 17%.

US : U.S.: Nasdaq
$ 117.17
+9.06 +8.38%
Volume: 13.10M
June 22, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$32.25 billion
Rev. per Employee
+21.65 +0.51%
Volume: 1.78B
June 22, 2021 5:15p

Emily Bary is a MarketWatch reporter based in New York.

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