Why Is Peloton (PTON) Stock Down Again Today?

  • Consumer discretionary stocks are getting hit hard today as investors worry about inflation
  • Among the biggest losers is Peloton (NASDAQ:PTON)
  • This stock’s 6% drop today continues an impressive downward trajectory for the pandemic high-flyer
Peloton (PTON stock) sign on city storefront
Source: JHVEPhoto / Shutterstock.com

One stock that hasn’t been getting a lot of love lately is Peloton (NASDAQ:PTON). Shares of this at-home fitness company are down nearly 90% over the past year and 33% over the past month. This helps put today’s decline of 6% in PTON stock into perspective.

For many consumer discretionary stocks, it has been a rough year. With financial conditions tightening, many expect that the goldilocks period we saw following the pandemic could be nearing an end. Poor earnings from Target (NYSE:TGT) and Walmart (NYSE:WMT) last week have furthered concerns that the post-pandemic spending binge may be over.

Specifically, for the higher-end discretionary items Walmart and Target stocked up on, demand hasn’t materialized. For premium products, such as those sold by Peloton, that’s not providing much in the way of a positive outlook for investors.

Let’s dive into why these concerns are driving such an outsized response today.

The Selling Won’t Stop for PTON Stock

Many investors are looking at last week’s retail scare as a turning point for consumer-sensitive stocks. Companies like Walmart and Target are among the strongest large-cap, blue-chip names in the market. When their margins decrease, investors take note.

For Peloton, this margin pressure could be an even bigger concern. That’s because Peloton’s offerings are generally perceived as nice-to-have luxuries rather than necessities. A retailer of high-end fitness equipment isn’t really the place people want to invest right now. Indeed, with gyms seeing solid uptake once again, the return to normal is providing yet another headwind for investors in PTON stock.

These catalysts are likely to remain for some time. Peloton may be a difficult company to invest in, or even trade, from here. At some point, every stock becomes too cheap to ignore. However, clearly the market thinks that Peloton could have more room to fall.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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