10 Most Promising Penny Stocks According to Hedge Funds

3. Peloton Interactive Inc. (NASDAQ:PTON)

Share Price as of October 11: $4.74

Number of Hedge Fund Holders: 38

Peloton Interactive Inc. (NASDAQ:PTON) is an exercise equipment and media company with products like stationary bicycles, treadmills, and indoor rowers equipped with Internet-connected touch screens that stream live and on-demand fitness classes. It also offers a subscription service that provides access to their fitness content, including workouts, music, and meditation.

The company reported better-than-expected FQ4 2024 results. Revenue increased 0.22% year-over-year to $643.60 million, driven by a 2.3% increase in the subscription area. Per-share loss narrowed to $0.08 from $0.68. Gross profit margin improved significantly due to the closure of the Precor plant, leading to a rise in adjusted EBITDA. The improvements came as it reduced total sales and marketing expenses by 19%. The secondary market delivered a 16% increase in paid connected fitness subscribers in FQ4. Connected Fitness revenue from the treadmill portfolio grew 42%.

Earlier it had launched the half-marathon training program on Global Running Day in June. The company recently partnered with Truemed, on October 10, to allow customers to use HSA/FSA dollars to purchase Peloton equipment. This partnership aims to make fitness more accessible and affordable for consumers by providing tax-free payment options for health products and services.

Peloton Interactive Inc. (NASDAQ:PTON) is making progress on several key strategic priorities, including improving profitability, investing in innovation, and exploring capital allocation strategies. The company is also focused on delivering stronger bottom-line results to support its investments in software, hardware, and content.

Patient Capital Opportunity Equity Strategy stated the following regarding Peloton Interactive, Inc. (NASDAQ:PTON) in its first quarter 2024 investor letter:

“Peloton Interactive, Inc. (NASDAQ:PTON) declined in the first quarter, hitting its lowest per share valuation in late March since becoming a public company. The company has taken drastic action to right-size the extremely bloated cost structure, expand sales channels (Amazon, Dick’s Sporting Goods), and test other ways to reinvigorate growth. The company is hyper focused on reaching positive free cash flow generation, but the path was pushed out. We continue to believe the value of the business lives in the high-margin, sticky subscription piece of the business. We think at current valuation, the company will either successfully turn things around or be a take-out target.”