While the COVID-19 outbreak and the subsequent lockdowns brought the global economy to a standstill, it provided wind in the sails of businesses whose products and services helped people stay operational remotely.
However, once the scare of a recurring health crisis due to the spread of the Omicron variant was successfully eased at the start of this year, significant economies began to open up. Most consumers and workforces switched from just exclusively working and living at home.
As a result, businesses, such as meal delivery companies, and connected fitness platforms, which hit a purple patch at the height of the pandemic, experienced a reversal in their fortunes. Furthermore, such businesses have been struggling to stay afloat due to various macroeconomic headwinds, including multi-decade high inflation, the Fed’s hawkish tilt, and geopolitical instability,
Hence, we look closely to find out if pandemic-darling stocks, Peloton Interactive Inc. (PTON) and Just Eat Takeaway.com N.V. (JTKWY), have the fundamental strength to endure the current headwinds or if they have indeed put their best behind them.
Peloton Interactive Inc. (PTON)
PTON provides an interactive fitness platform and sells interactive fitness products in North America and internationally. The Company operates through two segments: Connected Fitness Products and Subscription.
Last month, PTON announced plans to cut approximately 800 jobs to reduce its operating footprint and costs. In addition to job cuts, the company announced price increases on specific products and outsourced functions such as equipment deliveries and customer service to third-party vendors. The company will also gradually close many retail showrooms beginning next year.
For the fiscal 2022 fourth quarter ended June 30, 2022, PTON’s total revenue decreased 27.6% year-over-year to $678.7 million. Its loss from operations widened 298.6% from the prior-year quarter to $1.20 billion. The company’s comprehensive loss worsened 301.8% from the year-ago value to $1.24 billion. Its net loss per share widened 250.5% year-over-year to $3.68.
Analysts expect PTON’s revenues to decline 14.6% year-over-year to $3.06 billion in fiscal 2022. In addition, the company is expected to keep reporting losses per share for the current two consecutive fiscals. The stock has declined 45.3% over the past six months and 90.1% over the past year to close the last trading session at $11.05.
PTON’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. PTON has a grade of F for Quality and Sentiment and a D for Value and Stability.
Within the Consumer Goods industry, it is ranked #56 of 58 stocks. Click here to see additional POWR Ratings for Growth and Momentum for PTON.
Just Eat Takeaway.com N.V. (JTKWY)
Headquartered in Amsterdam, Netherlands, JTKWY operates as an online food delivery marketplace that allows users to order food from nearby restaurants to have it delivered to their homes.
JTKWY’s services are available in Canada, the United States, Austria, Belgium, Denmark, Germany, Luxembourg, Norway, Poland, Switzerland, Slovakia, the Netherlands, Australia, Bulgaria, France, Israel, Italy, New Zealand, Portugal, Romania, and Spain, as well as through partnerships in Colombia and Brazil.
On August 19, JTKWY announced the sale of its equity stake of approximately 33% in the iFood joint venture to Prosus N.V. (PROSY) in return for a cash consideration totaling up to €1.8 billion ($1.82 billion). This marks an attempt by the company to improve profitability and pay off debt after reporting heavy half-year losses recently.
For six months ended June 30, 2022, JTKWY’s operating loss widened 880.3% year-over-year to €3.48 billion ($3.52 billion). This resulted in a total comprehensive loss of €2.89 billion ($2.93 billion) for the period, 11,464% worse year-over-year.
Analysts expect JTKWY to report a loss of $3.85 for fiscal 2022. The stock has plummeted 43.1% over the past six months and 80.1% over the past year to close the last trading session at $3.68.
JTKWY’s bleak outlook is also reflected in its POWR Ratings. It has an overall rating of D, which translates to a Sell in our proprietary rating system.
JTKWY has a quality rating of F and ranks #57 among 72 stocks in the F-rated Internet industry.
PTON shares were trading at $9.93 per share on Tuesday afternoon, down $1.12 (-10.14%). Year-to-date, PTON has declined -72.23%, versus a -16.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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