What’s the Deal With Peloton Stock Today?
- Shares of at-home fitness equipment maker Peloton (NASDAQ:PTON) plunged Monday on concerns related to the safety of Peloton machines, particularly as it relates to children and pets.
- Peloton stock dropped more than 7% to just above six-month-lows.
- As of this writing, Peloton’s stock is trading 2.4% lower.
Here’s What Happened With Peloton
- A month ago, news broke of an incident involving a Peloton Tread+ in which a child died. This incident prompted a broader investigation by the U.S. Consumer Product Safety Commission, or CPSC, into Peloton treadmills.
- The CPSC issued a statement over the weekend warning consumers to stop using Peloton Tread+ machines.
- The organization says they have uncovered 39 incidents to-date.
- Based on an investigation of those incidents, the CPSC said in its release that it believes that “the Peloton Tread+ poses serious risks to children for abrasions, fractures, and death.”
Peloton’s Pose No Greater Risk Than the Average Treadmill
- A deeper dive into the data shows that Peloton machines aren’t any more dangerous that your average treadmill, and that neither present any meaningful risk to children.
- There were 22,500 treadmill-related injuries in 2019 in America, about 2,000 of which involved children under the age of 8.
- Rough estimates peg the number of at-home treadmills in the country at around 55 million.
- Thus, the annual odds of a child hurting themselves on at-home treadmill is 0.004%.
- Peloton’s numbers are even better. It appears there have been 23 Peloton accidents involving children over the past 12 months, on a Peloton subscriber base of about 2 million. That equates to odds of 0.001%.
- Deaths almost never happen on either.
- The data says Peloton’s are not dangerous, and therefore, the drop in PTON stock seems like an opportunity.
PTON Stock Price Forecast
- We do not expect this incident to materially impact Peloton’s demand.
- Consumer awareness of the CSPC warning will remain limited. Even consumers who are aware of it today, will likely forget about it in weeks or months.
- Meanwhile, underlying demand trends for Peloton machines should remain vigorous over the next few months, as the “reopening” actually inspires folks to workout more and test more at-home options. It also helps that this reopening is happening right before summer.
- Peloton stock remains undervalued, with shares trading around $100 and the consensus analyst price target sitting above $160.
- We expect PTON stock to trend toward $150 as we head into summer.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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Article printed from InvestorPlace Media, https://investorplace.com/hypergrowthinvesting/2021/04/pelotons-arent-dangerous-so-buy-pton-before-it-soars-to-150/.
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