With the beginning of a new year comes new year’s resolutions, and come January, the start of fitness regimens. How will home fitness stocks like Peloton and Nautilus do in 2023 in light of this?
As fitness enthusiasts quit utilizing their at-home training equipment and started going back to the gym last year, Peloton shares sank by 77% and Nautilus by 75%.
They were formerly favorites during pandemics, but that changed in 2022. Will it happen again this year?
In 2023, will PTON Have to Pedal to Accelerate?
Barry McCarthy, a former Spotify CFO, took over as CEO of Peloton when John Foley left the company in 2022, and it appears that (NASDAQ: PTON) stock has encountered some resistance.
The company not only sells its bikes and treadmills but also runs a subscription-based business where customers sign up and receive daily workouts such as spin classes, boxing, and yoga.
Peloton struggled to keep those subscribers in 2022 as people started going back to traditional gyms after the outbreak.
According to Jason Helfstein, an analyst at Oppenheimer, “management was seeing pent-up demand for lower-priced treadmills, but 50% of first sales are projected to go to existing bike customers, producing limited additional subscription revenue.“
“Those who lamented the closure of gyms and workout programs during lockdown found comfort in Peloton. The brand performed remarkably well thanks to clever marketing and a large fan base.” according to Sophie Lund-Yates, a lead stock analyst at Hargreaves Lansdown, one of the group’s selling points was that it provided more than just the infamous Peloton cycle.
Additionally, it provided users with a rich – and very profitable – subscription to classes.
During the epidemic, Peloton’s sales more than doubled to $4.0 billion.
Boost for 2023
Having said that, PTON has had a successful start to 2023 as people begin to live up to the “new year, new me” motto and burn off the holiday fat.
This year alone, its stock price has increased by 12%.
Additionally, it looks that “unusually significant” options trades this month were directed at the company, and several Wall Street analysts are predicting the stock will increase.
In a research report distributed to clients and investors on Wednesday, January 4th, stock analysts at William Blair increased their Q2 2023 EPS predictions for Peloton Interactive.
William Blair analyst R. Schackart has raised his projection for the company’s quarterly earnings per share from $0.85 to $0.84, according to a note from MarketBeat analysts.
In a research published in November, JMP Securities lowered its target price for Peloton Interactive from $25.00 to $16.00 and assigned the business a “market outperform” rating.
More Optimistic Investors
On Thursday, November 3, PTON disclosed its most recent quarterly data.
The firm revealed that its sales for the quarter were $616.50 million, which was lower than analysts’ projections of $638.73 million. Additionally, the year’s overall revenue decreased by 23%.
Institutional investors and hedge funds, however, have recently updated their positions despite this.
In the second quarter, Wahed Invest LLC added a fresh $29,000 holding in Peloton Interactive.
In the third quarter, Exchange Traded Concepts LLC also grew its holdings in Peloton Interactive by 943.8%.
Exchange Traded Concepts LLC acquired an additional 4,077 shares of the company’s stock during the most recent quarter, bringing its total share count to 4,509, valued at $31,000, according to MarketBeat analysts.
Not Yet Safe
However, PTON is not yet safe from harm. If the stock were to bounce back in 2023, it will still need to work a little.
Peloton is currently the best “emblematic narrative,” according to Simeon Siegel, Managing Director of BMO. Siegel claimed that PTON had constructed its organization as though it would “live forever” after it witnessed its business collapse and then experience a business spike during the pandemic.
“At the moment, the new management is doing a fantastic job of eliminating fixed costs. However, it does imply that they are a grower,” Siegal added.
It doesn’t imply that their Total Addressable Market is infinite (TAM).
The fact that more people are canceling means they won’t be able to sell the bikes to more people. Because of it, I think I would be more concerned about where we are now.
Although I still believe the product to be outstanding, I am concerned that its stock price is exaggerated.
What About NLS?
A prospective sale of the business was one of the “strategic alternatives” that US fitness equipment producer Nautilus (NYSE: NLS) revealed it was looking into back in September.
Nautilus, which competes with fitness companies and stocks like Peloton, was established in 1986 with the vision of becoming the world’s foremost provider of cutting-edge at-home exercise solutions.
Like PTON, Nautilus has struggled to return to its pre-pandemic highs of $28.43; as of 6 January, it is currently trading at $1.51.
NLS issued a recall of more than 7,300 of its T616 and T618 treadmills last year.
“The treadmills can start on their own, creating a fall hazard to a user,” read the recall notice from the US Consumer Product Safety Commission.
On the Stock and Its Prospects for the Future, Analysts are Not at All Upbeat.
Last year, NLS revised its short-term projections, which led analysts to lower their expectations. Michael Swartz, an analyst at Truist, decreased his stock’s price target from $15 to $5 while maintaining a buy recommendation.
According to analysts, NLS stock will generate $324 million in revenue in 2023, a 16% decline from its sales in the previous year.
Since Nautilus was having problems last year, experts have revised their loss projections downward in response.
Data also suggest that NLS revenues will rise more slowly than the market as a whole.
Despite the fact that we are still in the first week of the year and Peloton has witnessed an improvement in its fitness stock price during this period, it would appear that fitness stocks PTON and NLS have had a slow start to 2023.
It appears that the two will need to do more than just introduce new bikes, treadmills, and equipment if they want to see any favorable share price changes this year.
Both businesses must continue to add new subscribers while maintaining their present consumer subscriptions.
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