‘Sex And The City’ Reboot Is The Least Of Peloton’s Worries—With Shares Down Over 70% This Year

Topline

After a streak of heavy losses, shares of at-home fitness equipment maker Peloton rose slightly on Monday after the company released a new ad hitting back at HBO’s Sex and The City reboot, in which a major character was killed during a ride on the company’s bike.

Key Facts

Peloton’s stock rebounded on Monday, rising nearly 4%, after the company released a parody commercial on Sunday in response to a plot line in the Sex and The City reboot.

The new ad features star Chris Noth, whose character on the show died after riding a Peloton bike, alive and well, with a voice over by Ryan Reynolds reminding everyone that the company’s fitness equipment can improve physical health, not damage it.

The episode last week sent Peloton shares tumbling, piling onto a recent sell-off that has been ongoing since early November, when the company reported dismal quarterly earnings and slashed sales forecasts for 2022. 

The at-home fitness equipment maker was considered a pandemic-era stock market darling amid high demand from customers stuck at home during lockdowns—and shares skyrocketed roughly 440% in 2020.

Peloton’s stock is down nearly 75% so far this year, however, with the company’s market value falling from a peak of nearly $50 billion in January to just $13 billion today.

Investors have grown increasingly concerned about Peloton’s future growth prospects: The company faces slowing demand as people return to gyms and has had to slash prices for its exercise bikes.

Crucial Quote:

Although the negative depiction of Peloton in the Sex and The City reboot is “unlikely to impact sales,” it does question whether the company is “losing degrees of control over its storytelling,” said BMO Capital Markets analyst Simeon Spiegel in a note last week. “Although all PR is supposedly good PR, it’s hard to ignore the changing tide in Peloton’s public perception.” With the company making efforts to regain control of its brand image, it was a smart move to recruit famous actor Ryan Reynolds for the latest commercial, Spiegel admits. 

Key Background:

Peloton’s stock has been steadily falling since early November, after the company’s lackluster third quarter earnings—complete with a massive cut to sales forecasts—sparked a massive sell-off. Shares fell as much as 35% in one day immediately following Peloton’s earnings report. The company’s troubles have been more extensive than just in recent months, however: Amid a wider reopening of the economy in 2021, Peloton has felt the impact of more consumers heading back to gyms, which has notably slowed sales and subscriber growth. 

Contra:

While most Wall Street analysts advise caution when it comes to Peloton’s stock, Deutsche Bank initiated coverage earlier this month with a “buy” rating and price target of $76 per share, implying a nearly 90% upside from current price levels. The firm believes Peloton still has momentum and room for growth, although the stock requires “patience.”  

Further Reading:

Peloton Hits Back At ‘And Just Like That’ With Ad Starring Chris Noth, Voiced By Ryan Reynolds (Forbes)

Is The Era Of Stay-At-Home Stocks Over? Here’s Why Zoom, Peloton And Others Have Slumped In 2021 (Forbes)

Peloton Plays Damage Control After ‘Sex And The City’ Character’s Fatal Heart Attack While Riding Exercise Bike (Forbes)

Peloton Shares Plunge Over 30%—And CEO John Foley Is No Longer A Billionaire (Forbes)

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