Investors appear to be taking a better read of Pelotons earnings report this morning than what the raw numbers show.
While the company did beat expectations on an EBITDA basis, reflecting growth at its core operations, earnings per share showed a loss of $0.04 for the most recent quarter. In addition, Peloton's quarterly revenue showed a 9.4% decrease from the same period last year, though beating analysts’ target.
Peloton's management guided revenue for the next quarter to a range of $605 to $625 million. That number is below current Wall Street estimates of $653 million. The company offered inline guidance for fiscal year 2025.
That combination of guidance suggests that Peloton is going to have a tight couple of quarters over the next six months, but expects to see fiscal year 2025 operations improve.
Investors reacted positively, with the shares up more than 20% in early trading. Midday trading would see the price of Peloton fall below a critical technical trendline.
Shares of Peloton slipped below $9 a price that holds two technical resistance features.
First, $9 holds round number significance. This same price held shares at Bay as resistance in November and is likely to hold as resistance as shares move lower.
In addition, $9 is also the size of the stocks 50 day moving average. That moving average is shifted into a neutral outlook. Failure for Peloton to move above that 50-day moving average. We'll see it shifting to a bearish trend targeting the $7.00 price level.
It's notable that Peloton short interest ratio is relatively high as 3.5. This indicates that some of today's buying may have been triggered by short covering and would explain the stock’s lack of follow-through.
Peloton bulls should stay aware of the $9 resistance level as well as the trend of the 50-day moving average. A shift back into a short-term bearish trend will target $7.00 and then $5.00 as investors rethink holding Peloton through the forecasted tough comeback.
