The fitness-at-home equipment maker, Peloton (NASDAQ:PTON), lost its appeal with the easing of COVID restrictions. The moderation in demand led to a massive correction in its price, wiping out its shareholders’ wealth. Given the slump, its former CEO, John Foley, faced repeated margin calls from Goldman Sachs (NYSE:GS), which gave him a loan against his Peloton holdings, the Wall Street Journal reported.
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The report highlighted that Foley secured private financing to avoid stock sales by Goldman.
Notably, Peloton’s business deteriorated as pandemic-driven demand began to fade and uncertainty gripped its prospects. Peloton stock has lost over 90% of its value from the 52-week high.
PTON stock has lost substantial value. Should investors take advantage of this weakness to buy PTON stock? Let’s find out.
What is the Prediction for Peloton Stock?
Despite the considerable decline in PTON stock, the softness in demand, margin headwinds from input cost pressure, and lower pricing keep Wall Street analysts cautiously optimistic about its prospects.
Peloton stock has received 12 Buy, eight Hold, and two Sell recommendations for a Moderate Buy consensus rating. Due to the correction in its price, the analysts’ average price target of $15.88 implies a strong 80.9% upside potential.
Investors should note that hedge funds have accumulated PTON stock on the dip. TipRanks’ data shows that hedge funds acquired 1.8M Peloton stock last quarter. Peloton stock has a Neutral Smart Score of five out of 10 on TipRanks.
Bottom Line
Undeniably, the investment in Peloton stock has turned sour. Further, the uncertainty over future demand and margin headwinds pose challenges. However, the company is taking measures like rightsizing inventory, lowering costs, and focusing on driving subscriptions, which could help stabilize its business.
