Analysts, Options Traders React to PTON's Earnings

No less than 10 bear notes were dished out for the equity

Assistant Editor
May 7, 2021 at 10:06 AM
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Peloton Interactive Inc (NASDAQ: PTON) made headlines this week after recalling its treadmills, resulting in a current-quarter hit of $165 million. In addition, the company just turned in its first-quarter report, which saw the fitness equipment maker share smaller-than-expected losses with revenue that beat estimates, alongside a cut to its sales and profit forecast for the current fiscal year. In response, no less than 10 analysts chimed in with price-target cuts, including one from UBS to $74 from $124. PTON was last seen up 7.8% to trade at $90.34.

Coming into today, most analysts were bullish, with 19 of the 23 in coverage calling it a "buy" or better. Plus, the 12-month consensus price target of $150.04 is a 69% premium to last night's close. Even further, short sellers are building their positions. Over the last two reporting periods, short interest rose 28.2%, and the 21.44 million shares sold short already make up 8.5% of the stock's available float.

On the charts, things were already looking shaky for Peloton stock prior to the recall, with pressure looming overhead from the 10-day moving average. The announcement only made things worse, resulting in a plunge blow the $84 level for the fist time since September 2020. Once the pandemic stay-at-home staple, PTON is now down 41.6% in 2021.

Options traders are coming out of the woodwork today as well. In the first hour of trading, 36,000 calls and 36,000 puts have crossed the tape, which is seven times the intraday average. Most popular is the weekly 5/7 80-strike put, followed closely by the 95-strike call from the same series, with new positions being opened at the latter. 

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) sits at a high 92 out of 100. In simpler terms, this indicates that Peloton stock has exceeded volatility expectations during the past year.

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