Personal fitness and health are important, and Peloton Interactive (NASDAQ:PTON) sets a high standard for premium exercise equipment. Yet, in 2021 so far, it appears that PTON stock is going nowhere fast.
Prior to this year, Peloton was riding high as Covid-19 pandemic lockdowns caused people to exercise at home rather than at gyms. As a result, it felt like nothing could stand in the way of the company’s growth trajectory.
But then, a pair of terrible incidents occurred and Peloton’s reputational damage has cast a shadow over the company. And with that, PTON stock went from a stay-at-home-trade winner to a directionless, struggling investment.
Still, Peloton’s story isn’t fully written yet. In light of a fitness-focused joint venture, Peloton might be able to shape up its fiscal outlook.
A Closer Look at PTON Stock
I won’t lie to you – I miss the good old days, back in March of 2020, when PTON stock could be bought for $20.
Those days are long gone, and the stock ran up to $150 by the end of the year. Folks on lockdown went on a home exercise equipment frenzy, you might say.
At the same time, however, Covid-19 vaccines were being distributed to the public. Lockdowns were lifted. And as usual, people abandoned their treadmills (admit it – you’re probably guilty of doing this too).
Probably as a result of these factors – along with a couple of very unfortunate incidents, to be discussed momentarily – PTON stock slid during 2021’s first quarter and hasn’t recovered yet.
Along the way, the stock has chopped around and drifted aimlessly. It’s frustrating for technical analysts and investors alike.
If we have to identify a price target for PTON stock, it would probably be the 52-week high of $171.09.
Just maybe, a recent development could be the catalyst that gets the stock back to its prior peak.
It’s painful to reflect on what happened earlier this year.
First, there was an incident, as reported by the United States Consumer Product Safety Commission, which involved a three-year-old child:
“3 yo boy was trapped under a Peloton Tread Plus, found by his father to be not breathing and pulseless – he was resuscitated and now has significant brain injury. He was found to have tread marks on his back matching the slats of the treadmill, neck injury, and petechiae on his face, presumably from occlusion of blood flow.”
The outlook brightened somewhat when, on March 17, Peloton stated that the company had been informed by a member that the three-year-old child was “expected to fully recover.”
However, not long after that, reportedly a young child (different from the one discussed above) was killed in an accident involving a Tread Plus treadmill.
Partnering to Promote Health (and Wealth)
There’s no denying that these incidents are horrendous. We can only hope that there won’t be any more tragedies to report.
Peloton can’t change what’s already happened. However, the company can work diligently to rebuild its reputation.
Starting on Sept. 1, nearly 4 million UnitedHealthcare commercial members will be able to access Peloton’s fitness classes through the Peloton App.
This, first and foremost, could lift Peloton’s reputation. Yet, there’s also a potential benefit to the company’s bottom line.
Some of those 4 million UnitedHealthcare commercial members (give or take a few) might purchase a treadmill or a stationary bike.
Also, they may choose to renew with a paid Peloton fitness program membership. Truly, this collaboration is game-changing for Peloton.
The Bottom Line
Nothing can change what’s happened in the past. There are terrible events which must prompt Peloton to make changes.
The UnitedHealth collaboration won’t fix everything, but it’s a step in the right direction.
And with that, PTON stock holders – with a fair balance of caution and hope – have a reason to stay in the trade.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.