How the mighty have fallen. When we think about breakout stocks from the first wave of the pandemic, one name that instantly comes to mind is Peloton (NASDAQ:PTON). For a company that specializes in high-end at-home fitness equipment, a country forced to stay at home was the best-case scenario for PTON stock.
With many deprived of workout equipment and community, Peloton’s equipment was able to provide both. Ever since the world reopened, however, we’ve learned how consumers really feel about the company’s pricy exercise bikes and treadmills. PTON stock has been falling for months, but this morning brings some news that promises to send it plunging even further.
What’s Happening with PTON stock
Among this morning’s news is an important announcement from Nasdaq (NASDAQ:NDAQ). The decision? The multinational financial services corporation has confirmed that it will remove PTON stock from the Nasdaq 100 Index; The Street reports that, as of Jan. 24, Old Dominion Freight Line (NASDAQ:ODFL) will replace PTON on the benchmark tech index.
Pelaton doesn’t have much of a case as to why it should stay. As of this writing, PTON stock is down more than 4% for the morning and isn’t showing signs of a rebound. This performance pulls the stock into the red by over 11% for the week. It’s declines for the past one month are even worse, recently passing 25%. When we consider the fact that this stock has fallen by more than 70% within the past six months, Nasdaq’s decision certainly makes sense.
Why It Matters
Pelaton is known for producing spin bikes, but there’s no positive spin for what this news means for the company. PTON stock has been slipping since the world opened back up. Bears have been circling it for months and this type of development will have them closing in even quicker.
Why has PTON stock been plunging? InvestorPlace contributor Larry Ramer recently showed us exactly why. As Ramer notes, every macrotrend has been working against the company lately. In 2020, the world forced consumers to stay home. Plus, many had money to spend due to stimulus increases. Two years later, though, much has changed. Americans continue to demonstrate that they are happy to return to the gym. And even if they aren’t, Pelaton’s expensive equipment has clearly lost its luster. Lastly, with stimulus funds dried up, fewer folks have the additional income to splurge on luxury fitness items.
Fitness stocks are certainly complicated, as InvestorPlace’s Robert Waldo outlines. Of course, we know the emphasis on fitness in the U.S. isn’t going to decrease. But the question is just how will it evolve?
What we do know is that it won’t center around Pelaton. Even being one of its sector’s most popular name brands hasn’t been enough to help PTON stock regain even a fraction of the ground it has lost since breaking out.
What It Means
As the omicron variant spread this December, investors wondered if it could help names like PTON stock grow again. Over a month later, though, it’s clear that InvestorPlace contributor Steve Booyens was correct in his prediction. This stock will not be a stay-at-home play in 2022 unless its fundamentals improve. And so far, nothing has improved.
As this company stairs bleakly into the year ahead, there is no cause for investors to be optimistic. Today’s decision from Nasdaq will likely be a final nail in PTON’s coffin.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
