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The price target suggests about 30% downside risk relative to yesterday’s closing price. Key factors shaping Wolfe’s bearish stance on Peloton are: Lower demand for longer, lack of confidence in new growth initiatives, and unclear path to sustainable profitability/FCF.
“While the outlook for PTON’s LT growth has been significantly reduced, we still see the risks of potentially declining subscriber growth ahead. Additionally, the unit economics of the business are eroding, stemming from new strategic initiatives and higher limited pricing power,” analysts said in a client note.
“Furthermore, new growth initiatives such as FaaS and Digital are still a very much work-in-progress and it’s unclear whether they can contribute to growth & profitability on a sustained basis.”
Peloton shares are down 2.8% in pre-market Wednesday.
