How the mighty fell. When you think of the breakout actions of the first wave of the pandemic, one name that immediately comes to mind is platoon (NASDAQ:PTON). For a company specializing in high-end home fitness equipment, a country forced to stay at home was the best-case scenario for PTON stock.
With many people deprived of training and community gear, Peloton’s gear was able to provide both. Since the world reopened, however, we’ve learned what consumers really think of the company’s pricey exercise bikes and treadmills. PTON stock has been falling for months, but this morning brings news that promises to send it even lower.
What’s going on with the PTON stock
Among the news this morning is an important announcement from Nasdaq (NASDAQ:NDAQ). Decision? The multinational financial services company has confirmed that it will withdraw PTON shares from the Nasdaq 100 Index; The street reports that, since January 24, Former Dominion Freight Line (NASDAQ:ODFL) will replace PTON on the benchmark technology index.
Pelaton doesn’t have many arguments as to why he should stay. As of this writing, PTON stock is down more than 4% for the morning and shows no signs of a rebound. This performance pulls the stock into the red by more than 11% over the week. Its declines over the past month are even worse, recently exceeding 25%. Considering the fact that this stock has fallen more than 70% in the past six months, Nasdaq’s decision certainly makes sense.
why is it important
Pelaton is known for producing spin bikes, but there’s no positive spin for what this news means for the company. PTON’s stock has slipped since the world reopened. The bears have been circling it for months and this kind of development will make them close even faster.
Why did PTON stock plunge? InvestorPlace Contributor Larry Ramer recently showed us exactly why. As Ramer notes, every macro trend has played against the company lately. In 2020, the world has forced consumers to stay at home. Plus, many had cash to spend due to stimulus increases. Two years later, however, a lot has changed. Americans continue to demonstrate that they are happy to return to the gym. And even if they aren’t, Pelaton’s expensive gear has clearly lost its luster. Finally, with stimulus funds running out, fewer people have the extra income to splurge on luxury fitness items.
Fitness stocks are certainly complicated, because InvestorPlace describes Robert Waldo. Of course, we know that the focus on fitness in the United States is not going to diminish. But the question is how will it evolve?
What we do know is that it won’t be centered around Pelaton. Even being one of the most popular brands in its industry hasn’t been enough to help PTON stock regain even a fraction of the ground it has lost since its inception.
What this means
As the omicron variant spread in December, investors wondered if it could help names like PTON stock grow again. More than a month later, however, it is clear that InvestorPlace contributor Steve Booyens was right in his prediction. This title will not be a home game in 2022 unless its fundamentals improve. And so far, nothing has improved.
As this company gloomily enters the coming year, investors have no reason to be optimistic. Today’s Nasdaq decision will likely be the final nail in PTON’s coffin.
As of the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any position in any of the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.