HomeTrading TipsLearn Today's Pullback in Peloton Stock and Its Cause

Learn Today’s Pullback in Peloton Stock and Its Cause

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  1. Today, an analyst lowered her prediction for the price of Peloton shares for the fourth time in the previous year.
  1. The business is attempting to restore positive cash flow by reducing expenses.

Peloton Interactive (NASDAQ:PTON)

After an analyst drastically lowered their price objective for shares of exercise equipment maker Peloton Interactive (NASDAQ:PTON) on Friday, the stock took another hit even though the market averages were up substantially as of 11:50 a.m. ET today, Peloton stock was down 6%.

What’s the Reason

UBS analyst Arpine Kocharyan recommended selling shares of Peloton Interactive (NASDAQ:PTON). The Fly reports that today she drastically reduced her price goal, from $13 per share to $8. She deserves credit for maintaining a sell rating on Peloton Interactive (NASDAQ:PTON) stock throughout its decline and reducing her price target accordingly. What Kocharyan is doing now is consistent with her earlier stance.

Kocharyan expresses skepticism that Peloton Interactive (NASDAQ:PTON) will once again experience a sales increase. She also doubts that the corporation can increase its earnings by implementing its plans to minimize costs. Peloton Interactive (NASDAQ:PTON) has a lot of unanswered questions, so it’s not surprising that the market would react unfavorably to the stock after Kocharyan’s comments.

What’s Next?

In response to Kocharyan’s remark, Peloton Interactive (NASDAQ:PTON) did indeed unveil in February an $800 million annual savings plan. According to management, the plan was to cut operating costs by $500 million. The company’s most recent quarterly report shows that these operating costs are being covered faster than expected.

So far, so good. However, operating costs still exceeded $1 billion in the most recent quarter, doubling yearly.

There has been an uptick in operating costs, although many of these expenditures were one-time events, and management is making headway on other operational costs, such as marketing and advertising. Conclusion: Kocharyan’s concerns are warranted, and while Peloton has made some headway in its recovery, the company still has a ways to go.

Featured Image – Megapixl © Mohammedsoliman4

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