Jim Cramer’s Latest Lightning Round: 10 Stocks to Watch

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

Number of Hedge Fund Holders: 38

Peloton Interactive, Inc. (NASDAQ:PTON) runs a connected fitness platform. It offers a variety of fitness equipment, including the Peloton Bike, Bike+, Tread, Tread+, Guide, and Row. Cramer commented on the company, saying “…Take the loss”.

Peloton’s (NASDAQ:PTON) journey has been marked by challenges, particularly following the surge in demand during the coronavirus pandemic, which significantly raised its profile in the fitness industry. As the pandemic began to wane, the company faced a tough transition.

In its fiscal fourth quarter, it reported an operating loss of $63.3 million, which was down from the previous year’s loss of $225.8 million. Revenue for the quarter reached $643.6 million, slightly increasing from $642.1 million a year earlier.

Analysts have highlighted the company’s efforts to turn around the business. For instance, on October 1, BMO Capital maintained a Market Perform rating and a $6.50 price target on Peloton (NASDAQ:PTON). The recent discussions with the company’s management were described as “upbeat”.

The firm highlighted the efforts to balance the pursuit of sustainable profits while also focusing on avenues for growth. Conversations included topics such as new product developments, pricing strategies, and operational efficiencies, as well as the ongoing search for a new CEO and initiatives aimed at expanding the brand’s presence in the market.

On August 26, Baird analyst Jonathan Komp raised the price target on the company stock to $4.75 from $4 and kept a Neutral rating. The firm noted that fourth-quarter revenue and adjusted EBITDA exceeded expectations. Additionally, its guidance for adjusted EBITDA and free cash flow for fiscal 2025 was significantly higher than consensus estimates.

The analysts expressed optimism about the financial advantages expected from the company’s move toward profitability and the potential announcement of a new CEO in the near future.

Patient Capital Management 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.”