Peloton Falls On UBS’ Sell Rating After Adoption In U.S. Weakens

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By Dhirendra Tripathi

Investing – Peloton (NASDAQ:) shares fell 3% Monday after UBS reiterated its sell rating and price target on the stock, given adoption of the company’s fitness app has fallen for three consecutive months in the U.S.

UBS analyst Eric Sheridan’s $74 target for the stock is 25% lower than its current level of $99.

The popularity of the company’s fitness equipment and the app has taken a hit since the death of a child last month raised safety concerns around its Tread+, forcing the U.S. consumer safety regulator to ask consumers to stop using the treadmill if there are small children or pets at home.

Concerns around the equipment had been raised earlier as well. After much dithering and defense of the safety of its equipment, public outcry and pressure from the authorities, the company felt compelled to recall its Tread+ and Tread treadmills early this month.

According to StreetInsider, UBS Evidence Lab data appears to show that adoption level of the Peloton digital app in the U.S. is down three to four percentage points year-on-year in April and is down one percentage point more in May. Share of downloads started the year-on-year decline in March.

As of January this year, that share of downloads stood at 6.4% and has been declining sequentially to now closer to 2.9% share.

The report noted Planet Fitness (NYSE:), the top workout app in the U.S., has nearly quadrupled its share of downloads from 6% in May 2020 at the height of the pandemic.

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