Why Peloton stock fell 10% today

What happened

On a day when the stock market is up more than 1% overall, we saw stocks of Interactive Platoon (PTON -5.89%) down to 10%. The shares recouped some of those losses in afternoon trading, but are still down 6.2% as of 2:30 p.m. ET.

So what

The market continues to try to figure out what to do with a possible US recession, rising interest rates and an exit from pandemic stocks. The loudest voice today was the one Financial Times, who pointed out that Peloton actually has an inventory issue on their hands now that demand for bikes and treadmills has plummeted.

Image source: Peloton.

In the first quarter of 2021, Peloton had just 70 days of inventory on hand as demand for bikes skyrocketed and the company couldn’t keep up. But at the end of the first quarter of 2022, the company has 225 days of inventory. This is noteworthy, as at the end of last week there were multiple reports that the company was looking to raise $750 million in debt to try and survive the current drop in demand, which would make the stock even more risky because of the debt that weighs on the company. .

Now what

Peloton is in a tough spot until it can match its supply and demand. During the pandemic, the company built capacity in hopes that demand and revenue would continue to grow in the long term, but that didn’t happen as people went back to work and started cutting some expenses. . Now the company is just hoping to survive long enough to fight another day, which is not a promising sign for investors.