Peloton Interactive Stock News and Forecast: Is it time to buy or sell PTON?

Peloton (PTON) shares maintained recent bullish optimism on Wednesday as the stock added another 4% to the gains of 31% from Tuesday. The stock is currently at $38. 27 in Thursday's premarket. This is a loss of 1.3%. Ahead of the CPI data later on some derisking was inevitable. That may have been behind some of the huge spike on Tuesday. Shorts had taken increasingly aggressive positions after Peloton earnings, and news of a potential takeover will have led to a scramble to cover. 

Peloton Stock News

The hit to the former CEO's ego from the huge rise in share price on Tuesday after his resignation must have been swift. You lose your job and whammy – investors rub it in your face.

To be fair, the speculation regarding a takeover was probably the bigger reason behind the move. Practically every mega tech name was mentioned as a potential suitor as well as the majority of large sports apparel brands. The value in Peloton is its subscriber base, but is this sustainable and can it grow? That is the main question. The product is sound, and the platform is impressive.

However, the pandemic presented problems unforeseen for Peloton. It probably never expected to grow so quickly and struggled to keep up with demand. Now that the share price has retraced all the way back to pre-pandemic levels, does it still represent value? That is the key question.

Growth is not as prized as it once was. New CEO Barry McCarthy has already taken the knife to the bottom line with news of nearly 3,000 job cuts. “There’s no sugar-coating it. It’s a bitter pill, and in my experience the sting has a long half-life,” McCarthy said in an email quoted by The NY Post. “The hard truth is either revenue had to grow faster, or spending had to shrink. The math simply didn’t work otherwise, and the status quo was unsustainable.”

While the analyst community rushed to cut price targets after earnings, they remain bullish on the stock with an average price target of $46.77, with 13 buy ratings, 9 holds and only 2 sell ratings. Telsey Advisory, Oppenheimer and Stifel all increased price targets on Wednesday.

Peloton Stock Forecast

This remains a dead cat bounce until PTON enters the volume gap zone above $60. The Relative Strength Index (RSI) has been rising since hitting a low of 18 after earnings. This shows how even strongly oversold RSI levels can be misleading. The timing is key. The RSI bottomed on November 8, but Peloton stock lost another $20 before turning around. 

Peloton (PTON) chart, daily

The weekly chart looks a bit more promising with the high volume area providing support at $27. This has set up the potential for a bounce. 

Peloton (PTON) stock chart, weekly