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Peloton stock rebounds slightly after falling below its IPO price

Yahoo Finance's Julie Hyman and Brian Sozzi discuss Peloton stock bouncing back after tanking on Thursday.

Video transcript

JULIE HYMAN: Let's talk about Peloton as well, because the thread that, obviously, ties these two together is that they benefited hugely during the pandemic and now both are faltering. And even though Peloton is up this morning, it really appears to be kind of a rebound effect from yesterday's 24% drop.

Here's what's going on here-- CNBC reported yesterday that the company was temporarily halting production of its bikes because it had too much inventory, which is a complete reversal of the problem that it was having earlier in the pandemic, when it could not make bikes quickly enough to keep up with demand. So that's really a big difference here. And then the company came out with an announcement late yesterday, came out with preliminary fiscal second quarter revenue, $1.14 billion, which is a little bit shy of estimates, and said its Connected Fitness subscribers last quarter are at 2.77 million. That, too, is a little bit short of estimates.

But again, the stock is getting boosted this morning. And in a memo to staff, the CEO, John Foley, said, quote, "Rumors that we are halting all production of bikes and treads are false," which seems to imply maybe they're halting some production of bikes. Tough to tell.

But it seems like with Netflix there, are sort of macro trends, right? With Peloton, maybe there's some macro stuff going on. But it also seems to be an execution issue.

BRIAN SOZZI: That is a very good point. I think you cannot put Peloton in Netflix in the same class in terms of execution. What Netflix has done really since its founding is absolutely superb here. This is alarming stuff out of Peloton. And there's no other way to put it except the company is a hot mess right now. It really is.

And Foley also talking about now there was a leaker inside of her company. I mean, this is not an FBI investigation here. This is Peloton. They make exercise equipment. To see them fully calling out a leaker and they're saying that they found the leaker and they're taking legal action against them is ridiculous. They should be solely focused on selling treadmills and bikes and coming out with the right price points for these things.

Instead, now you have these just disappointing quarters from the company. You have concerns about their operating cash flow outlook moving forward. And now you see the likes, seeing some folks on Wall Street start to wonder where is the accountability? Why have no executives left Peloton really after this really challenging set of six months?

And then secondarily, at what point does an active investor might start kicking the tires on a Peloton? Here's a stock that has gone from about $167 in December of last year to below the IPO price, right now, according to premarket move, $24. So you have a stock trading below its IPO price. It's terrible. I mean, there's been a lot of just value destruction here with Peloton.

JULIE HYMAN: Yeah, most definitely. And you mentioned the Street and what's going on there in terms of opinions. There was one upgrade today that I noticed. That was Stifel upgrading the stock to buy from hold, the price target, though, being cut to $40 from $56. Cowen is still at an outperform, but cut its price target to $40 from $100.

And, of course, we're going to talk a little bit later on to Simeon Siegel, who now is the only underperform on the stock and has consistently been from BMO. He cut his price target to $24 from $45. So definitely a lot of bearish sentiment surrounding the company this morning.

And you mentioned, by the way, activism, right? There was one, the folks over at Citron Research yesterday talking about looking at Blue Apron as a potential target of something like--

BRIAN SOZZI: What?

JULIE HYMAN: --a Peloton. I know, I know.

BRIAN SOZZI: Why?

JULIE HYMAN: But, you know, I guess it makes sense. If you're going to be healthy, you're going to have the full package and maybe cook healthy, too.

BRIAN SOZZI: Julie, I'm surprised Blue Apron is still around. I mean, I'm just-- seemed surprised--

JULIE HYMAN: I was as well.

BRIAN SOZZI: --there's still ticker on the Yahoo Finance platform. I mean, there's a company that's really struggled massively since their ridiculous IPO on front of the New York Stock Exchange several years ago. It looked like they set up a farm. I still have the photo somewhere on my phone. It's ridiculous, major red flag for that company. So I'm not shocked to see it trading at about 7 bucks.

JULIE HYMAN: You know, I used Blue Apron for a hot second several years ago. And it wasn't for me in the end. But I get the appeal.

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