How High Can the Peloton Share Price Recover To?

Peloton share price has staged a strong recovery in the past few days. PTON stock has risen in the past four straight days and is sitting at the highest point since August 25. The shares have rallied by more than 75% from the lowest level this year, giving it a market cap of over $3.7 billion. 

Is this a bear market rally?

Peloton Interactive is a leading fallen angel that has seen its market cap crash from over $46 billion to about $3.7 billion. This decline happened as the company has moved from one crisis to another and even changed its business model.

Peloton Interactive’s business performed well during the pandemic as gyms were closed and most people shifted to home workouts. At the time, the number of its online subscribers jumped and demand for its products rose. Peloton’s annual revenue soared from $1.8 billion in 2020 to about $4 billion in 2021.

Now, with gyms reopening, the company has seen growth of its products fall. At the same time, Peloton’s products have become mere commodities that are being sold in Amazon. It has also struggled with rising inventory levels.

The most recent results showed that Peloton’s business is still struggling even as it made some modest improvements. The number of connected fitness subscriptions rose to 2.9 million while its total revenue slipped to $616 million. Its net loss expanded to $404 million.

Analysts are pessimistic about Peloton stock price. Those at Citigroup, Barclays, Goldman Sachs, BMO, Cowen, and Credit Suisse have all lowered their targets citing inventories and growth concerns. The most pessimistic are those from BMO Capital Markets who expect the stock to tumble to $8. The average estimate for the stock is $19, which is about 64.5% above the current level. 

In a recent note, analysts at Argus maintained their hold rating on the stock saying:

“We also expect the reopening of gyms and increased competition to weigh on results. Over the long term, we expect Peloton to benefit from increased interest in fitness products and operating leverage on higher sales.”

Peloton share price forecast

The daily chart shows that the Peloton stock price has made a strong recovery in the past few days. In this period, it has managed to move above the 25-day and 50-day moving averages. The two MAs have even made a bullish crossover pattern. At the same time, the Relative Strength Index (RSI) has moved close to the overbought level.

Therefore, the stock will likely continue rising as buyers target the key resistance level at $14.25. A drop below the key support at $9 will invalidate the bullish view