has lost three-quarters of its value since the start of 2021. A Raymond James analyst isn’t sure the new year will make a difference.
Peloton shares (ticker: were down 2.8% to $ 35.68 on Tuesday. If they close at that level, it would be the lowest close since May 4, 2020, when the stock hit 33, $ 90. Peloton’s shares have fallen 77% year-to-date, as investors fled high-flying pandemic games that appeared to see inflated demand amid Covid-19 shutdowns.
The company’s connected fitness subscription costs $ 39.99 per month to link Peloton classes and data tracking to its branded equipment. Subscriptions have been a hit amid the lockdowns, but the reopening has shown signs of declining demand. The disappointing outlook released in November sparked the latest massive sell-off.
Even concerns about the Omicron variant of Covid-19 weren’t enough to bring shares back to late 2020 levels. Some high-profile PR flops, including a death after a run in the Sex and the city restart, did not help.
Curious about whether Peloton’s demand increased over the holiday season, Raymond James analyst Aaron Kessler took a look at Google search data. Based on weaker-than-expected trends, Kessler believes the company’s outlook for 308,000 to 358,000 net added connected fitness subscribers in the December quarter could be too aggressive.
“Historically, Google Search Trends data correlated well with Peloton hardware sales,” Kessler wrote in a note. “Based on our updated analysis, research trend data indicates a continued slowdown in demand for Peloton sales during the December quarter. “
Search trends in the United States were down 30% year-over-year so far in the December quarter, compared to a 31% decline in the September quarter. Searches in the UK slowed 40% year over year, while searches in Germany fell 58%. A bright sign was Australia, where searches were up 213% year-over-year from a weak base last year.
Kessler rates Peloton at Market Perform. He doesn’t have a target price, but estimates a fair value at $ 38. If Peloton’s revenue growth recovers more than he hoped, he could see a fair value of $ 51, although this is a bullish case. In its bearish scenario, a larger slowdown takes stocks to $ 27.
“We continue to believe that significant demand has been pulled forward during the pandemic and, as such, sales are not seeing the typical seasonality we expected,” Kessler wrote.
Write to Connor Smith at [email protected]