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Peloton (NASDAQ:PTON) Stock Jumps on Amazon  Distribution Partnership
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Peloton (NASDAQ:PTON) Stock Jumps on Amazon Distribution Partnership

Story Highlights

Peloton has inked a partnership with Amazon to broaden its distribution channels. The deal comes as the company is experiencing a revenue slowdown in recent quarters from the pandemic highs.

Peloton Interactive (PTON) stock gained after the company partnered with Amazon (AMZN) to broaden the distribution channel of its fitness equipment. Under the terms of the agreement, the Peloton Bike Guide, select accessories, and apparel will now be available for purchase on Amazon U.S. stores.

Impact of Peloton-Amazon Partnership

Peloton stock has shed nearly 60% of its market value year-to-date. According to CNBC, the underperformance stems from investors’ responses to a slowing in revenue growth from the pandemic highs. The 20% jump in stock price following the conformation of the distribution deal with Amazon comes months after it emerged that the e-commerce giant was eyeing the fitness equipment company.

In February, the stock jumped 30% after it was reported that Peloton was drawing interest from Amazon. Amazon was speaking with advisers about a potential deal. While no deal has materialized, the latest distribution deal affirms the growing ties.   

The deal with Amazon should allow Peloton to broaden its customer base and win back investors’ confidence.

Prior to tapping the Amazon network for distribution, the fitness equipment was exclusively available through Peloton’s e-commerce site and global showrooms. The collaboration with the e-commerce heavyweight should allow the company to expand its distribution network and engage millions of Peloton’s members.

The latest move underscores Peloton’s drive to innovate and drive growth. According to Chief Commercial Officer (CCO) Kevin Cornils, the deal with Amazon should lead to increased access to the brand. For example, the Peloton Bike will now be available for in-home delivery. Customers will also have the ability to assemble the bike themselves.

According to CNBC, Peloton has also been testing a subscription model for its equipment as it looks to ramp up sales. The company intends to have at least 100 million members using its products daily. The company ended last quarter with 7 million members.

Peloton has struggled in recent months to get people back into gyms. According to the Wall Street Journal (WSJ), demand for fitness equipment has eased, prompting the company to pursue cost-cutting measures.

What is the Prediction for Peloton Stock?

Yesterday, JMP Securities analyst Andrew Boone reiterated a Buy rating on Peloton stock with a $25 price target. The new Peloton stock price target implies an 85.46% upside potential from current levels.

While Peloton stock is down by about 60% year-to-date, Wall Street is bullish about its long-term prospects. According to TipRanks’ analyst rating consensus, Peloton is a Moderate Buy based on five Buys and seven Holds. In addition, the average Peloton price target is $17.58. Analysts’ sentiments are bullish, with more than 30% upside potential to PTON’s current stock price.

Also, TipRanks’ Stock Investors tool shows that investor sentiment is currently Positive on Peloton’s stock. Over the past 30 days, 5.8% of the best-performing portfolios tracked by TipRanks increased their exposure in Peloton stock.

Final Thoughts

The gain in Peloton stock confirms investors’ conviction that the distribution deal with Amazon has the potential to address the recent slowdown in revenue growth. Additionally, it should broaden brand awareness.

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