Sep 29, 2022 (PressReach.com via COMTEX) -- PTON stocks were trading at $6.85 as of 01:59 PM EDT.
Just in time for the holiday season, Peloton Interactive /zigman2/quotes/208035743/composite PTON +5.44% and Dick’s Sporting Goods /zigman2/quotes/200566298/composite DKS +3.51% launched a new collaboration. As part of the agreement, Dick’s /zigman2/quotes/200566298/composite DKS +3.51% will operate branded fitness stores inside more than 100 DKS U.S. retail sites to sell Peloton’s hardware products and a few select accessories. In addition, Peloton will have a presence on Dick’s online store as part of the agreement.
Early in the holiday season is when the rollout is scheduled to begin. Notably, Dick’s (DKS) will be the only store to offer the range of linked fitness equipment from Peloton. Dick’s was deemed by Peloton management to be a logical fit for the brand. In premarket trading on Thursday, PTON stock /zigman2/quotes/208035743/composite PTON +5.44% increased by 2%.
Following the company’s announcement on Thursday of a new relationship with Dick’s Sporting Goods, Peloton Interactive /zigman2/quotes/208035743/composite PTON +5.44% lost another 15.85% and traded below $7 for the first time.
As part of the agreement, Dick’s will operate branded fitness stores inside more than 100 DKS U.S. retail sites and offer Peloton’s hardware products as well as a few select accessories. In addition, Peloton will have a presence on Dick’s online store as part of the agreement. Investors see the development unfavorably since Peloton’s use of Dick’s retail selling channel will likely result in some pricing power loss.
After Peloton Interactive /zigman2/quotes/208035743/composite PTON +5.44% announced a partnership with Dick’s Sporting Goods to stock its training equipment in a few stores, PTON stock’s shares fell sharply on Thursday. Peloton stock was down 12% as of 12:00 ET.
In fact, this revelation caused PTON stock to momentarily increase before the market opened. Investors are unsure of how to feel about it, as evidenced by the swift turnaround. On the one hand, if a company is attempting to move inventory, expanding its physical retail presence makes it logical. And Peloton is really interested in doing that.
On the other hand, Peloton’s full fiscal year of 2022 already had a negative gross profit margin on its hardware products. The specifics of its agreement with Dick’s Sporting Goods are not made clear in the press release. However, it makes sense to expect that Dick’s will profit on sales of the Peloton, further reducing the already negative margins. The market appears to be concentrating on this potential right now.
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Author: Jowi Kwasu
Market Jar Media Inc.
#170 - 422 Richards Street
Vancouver, BC, Canada
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