Peloton’s Pandemic Paradox

Why is the quarantine-friendly company’s stock suddenly tanking?

Rob Walker
Marker

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A Peloton stationary bike sits on display at one of the fitness company’s studios on December 4, 2019 in New York City.
Photo: Scott Heins/Getty Images

YYou might figure that if the Covid-19 pandemic causes lots of people to dump their gym memberships in favor of more quarantine-friendly fitness options, then Peloton — maker of a fancy stationary bike loaded with subscription streaming exercise programming — would benefit. You would not be alone: Plenty of stock-pickers have made precisely this argument in recent weeks, recommending PTON shares as an example of “Stay-at-home stocks that could weather the coronavirus.”

But, in fact, its share price has fallen in the last five days from about $23.30 to about $18.30 — roughly 17%, which is even worse than the S&P 500’s roughly 10% decline in the same stretch. Even as the broader markets rallied today, Peloton was at midday down over 6% from its opening price this morning. After trading around $27 in late February, it’s a little below $18 now. Why?

First, let’s take a closer look at the pro-Peloton argument. Earlier this week, TheStreet.com pointed to a research note from investment bank Needham & Company on the subject of stocks to buy, depending on whether the coronavirus worsens or “eases.” In a worsening environment, fitness-oriented consumers may well “perceive gym visits as increasingly risky over time,” Needham’s analyst observed…

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