Why Peloton Stock Is Up By 5% Today

Peloton Shares Move Higher After Company Announces Pricing Of Public Offering Of Its Stock

Shares of Peloton opened with a gap up today after the company announced the pricing of an underwritten public offering of its common stock. Peloton offered roughly 23.9 million shares at a price of $46 per share. Underwriters have the option to buy up to 3.26 million shares.

Peloton expects that net proceeds from the offering will total $1.07 billion. The money is expected to be used for general corporate purposes.

Earlier this month, the company announced the release of Peloton Guide, its first connected strength product. The prices for Peloton Guide start at $495. The product was not received well by the stock market, and it remains to be seen how it will perform when it is released in the U.S. and Canada in early 2022.

What’s Next For Peloton Stock?

It is a bit unusual to see that a stock gains ground after an offering was priced below recent lows. Perhaps, the market is reacting to Peloton’s ability to sell more than $1 billion of its stock near current price levels and believes that the offering will set a floor after the huge downside move which took Peloton stock from the $171 level to the $46 level.

The analysts remain skeptical about the company’s ability to make a profit, and earnings estimates kept moving lower in recent weeks. Currently, analysts expect that Peloton will report a loss of $2.84 per share in fiscal 2022 and a loss of $0.84 per share in fiscal 2023.

Peloton faces headwinds as people get back to gyms instead of exercising inside their homes, and the company will have to prove that it has a solid growth plan for the next few years. The equity raise provides Peloton with an opportunity to invest in its business, and the market will closely monitor how the money will be spent.

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