Why Peloton Shares Dipped In Wednesday's After-Hours Session

Peloton Interactive Inc’s PTON stock dropped in Wednesday's after-hours session as Goldman Sachs downgraded the fitness equipment company's stock rating from Buy to Neutral.

What Happened: The investment bank revised its rating from factoring in the stock surge over the last one year period, Bloomberg reports. In the last twelve months, PTON stock price has rallied 4.8 times higher and returned close to 317% on a year-to-date basis.

Goldman analyst Heath Terry believes that the company's 480% stock surge has taken into account its near term opportunities, according to Bloomberg. Gym lockdowns during the pandemic resulted in increased demand for home exercise equipment, which in turn provided Peloton stock with an upward thrust.

The Goldman analyst also hinted that the company’s upcoming quarterly release could fall short of expectations. Terry's analysis was based on delayed shipping due to congestions in the Los Angeles Port, as per Bloomberg.

Why Does It Matter: Last week, BofA Securities analyst Justin Post raised Peloton’s price target to $150, suggesting strong demand for its product. The home-exercise equipment maker's new factory, where it plans to start operations sometime in December, could double its production capacity, according to Post.

Peloton is set to release the financials for the first quarter of the fiscal year 2021 on Nov. 5.

Price Action: After a 5.78% fall during regular trading hours, PTON dropped an additional 3.26% during the extended trading hours at $120.25 per share.