What Happened?
Shares of exercise equipment company Peloton (NASDAQ: PTON) fell 6.4% in the afternoon session after the Bureau of Economic Analysis reported that the Fed's preferred inflation gauge (the Personal Consumption Expenditures (PCE) price index) revealed core inflation came in hotter than expected, fueling fear of stagflation (an economic situation of slow growth and rising prices). Core inflation excludes food and energy prices.
The Core PCE index showed inflation rose 2.8% (vs. estimates for a 2.7% increase) in February 2025 compared to the previous year and accelerated 0.4% (vs. estimates for a 0.3% increase) over the previous month. These figures added to concerns over proposed tariffs, which rattled markets all week.
The combination of rising inflation and escalating trade tensions likely clouded the economic outlook, raising uncertainty for businesses and policymakers.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Peloton? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Peloton’s shares are extremely volatile and have had 67 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 12% on the news that Canaccord analysts upgraded the stock's rating from Hold to Buy and kept a target price of $10. The analysts cited some of the reasons for the upgrade, noting "Peloton is the clear leader in the connected fitness industry, which they invested in early on and built a 6M loyal member base that has a high-margin recurring revenue stream."
Peloton is down 28.8% since the beginning of the year, and at $6.29 per share, it is trading 40.5% below its 52-week high of $10.57 from December 2024. Investors who bought $1,000 worth of Peloton’s shares 5 years ago would now be looking at an investment worth $226.90.
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