Peloton Interactive: Some Positive Developments, But Overall Fundamentals Remain Weak (Rating Upgrade)
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May Investing Ideas700 FollowersFollow5ShareSavePlay(8min)CommentsSummaryPeloton Interactive is upgraded to hold as operational risk has improved, but growth remains elusive.PTON shows stabilizing engagement and improved hardware margins, with Connected Fitness gross margin ex-recall at 15.8%, up 660 bps y/y.Subscriber base continues to shrink, down 6% y/y for the third consecutive quarter, and churn is expected to rise post price hikes.Product quality concerns persist, highlighted by a $16.5 million recall, undermining PTON's premium positioning and pricing power. Justin Paget/DigitalVision via Getty Images Investment Overview I wrote about Peloton Interactive (PTON) previously with a sell rating, as I thought the recovery wasn’t sustainable and that underlying demand health was still weak. While there are some positive developments, theThis article was written byMay Investing Ideas700 FollowersFollowI am an individual investor that is now fully focus on managing my own capital that I have saved up over the years. My investing background spreads across a wide spectrum as I believe there are merits to each approach, for instance: Fundamental investing [Bottoms-up etc.], Technical investing [historical charts analysis], and to some extend momentum investing [share price reaction post earnings etc.]. Over the years, I have used the positive aspects of each approach to hone my investing process. The reason to write on SeekingAlpha is to use this platform as a tracker for my investing ideas performance, and also to connect with like-minded investors that have the same investing interest.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.