5 Pandemic Stocks That Are Losing Value

2. Peloton Interactive, Inc. (NASDAQ:PTON)

Number of Hedge Fund Holders: 60

Loss in Share Price Over 6 Months as of March 1: 72.65%

Peloton Interactive, Inc. (NASDAQ:PTON) is a New York-based company that provides interactive fitness products to customers across North America and internationally. The stock hit market highs during the pandemic, as lockdowns and closed gyms pushed more individuals towards physical health, and demand for Peloton Interactive, Inc. (NASDAQ:PTON)’s at-home fitness equipment grew exponentially. 

The company’s market value rose to a record high of $49.3 billion in December 2020, but it has since plummeted to around $8.5 billion in January 2022. To meet the pandemic-driven demand, Peloton Interactive, Inc. (NASDAQ:PTON) invested in a new production space worth $400 million, but as gyms and social establishments reopened, the company experienced abundant supply but low demand. Adding to that, the recent supply chain challenges and the exceedingly slow delivery times are turning away potential buyers. 

The company also suffered when it had to recall equipment in May and November after several injury complaints surfaced and Peloton Interactive, Inc. (NASDAQ:PTON) received bad PR from mainstream television shows. Resultantly, the stock dropped 72.65% over the past six months.  

On February 10, MKM Partners analyst Rohit Kulkarni raised the price target on Peloton Interactive, Inc. (NASDAQ:PTON) to $35 from $30 but kept a Neutral rating on the shares after its Q4 results, updated outlook, and announced management changes. 

At the end of December 2021, 60 hedge funds were bullish on Peloton Interactive, Inc. (NASDAQ:PTON), down from 62 funds in the quarter prior. Durable Capital Partners is a notable shareholder of the company, with 5.4 million shares worth $194.3 million. 

Here is what Artisan Mid Cap Fund has to say about Peloton Interactive, Inc. (NASDAQ:PTON) in its Q4 2021 investor letter:

“We ended our campaigns in Peloton. Peloton is a connected fitness franchise known for its stationary exercise bikes that provide live and on-demand cycling classes. When we trimmed our position in 1Q21, we believed the stock’s valuation was reflecting relatively aggressive assumptions about post-pandemic membership growth. However, we underestimated just how much growth would slow by midyear. A seemingly slow launch of the new Peloton treadmill combined with meaningful price cuts on the bike are erasing the company’s margin progress of 2020, resulting in meaningful short-term losses. While we remain optimistic about the company’s long-term potential, we harvested our position given the negative profit cycle dynamics.”