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Wall Street has had a tough time building any kind of positive vibe lately, and the beginning of the final week of 2022 didn’t inspire any big changes in the dour mood. As we’ve seen throughout the year, the Dow Jones Industrial Average (^DJI) managed to buck the gloom by inching higher, but bigger concerns about the broader market in general and high-growth stocks in particular sent the Nasdaq Composite (^IXIC) and S&P 500 (^GSPC -0.41%) downward.
Index
Percentage Change
Point Change
Dow Jones Industrials
+0.11%
+38
S&P 500
(0.40%)
(16)
Nasdaq Composite
(1.38%)
(145)
Data source: Yahoo! Finance.
Peloton Interactive (PTON -8.44%) and WeWork (WE -19.08%) have both seen substantial declines in their stock prices over the past year, and both companies fell further by significant amounts on Tuesday. Indeed, the recent news from both of these hard-hit businesses has many investors wondering what their chances are to mount a recovery in 2023. Below, you’ll learn more about these companies and what their prospects for a turnaround look like right now.
Shares of Peloton Interactive finished lower by 8% on Tuesday. The interactive fitness equipment specialist made another strategic move in an effort to stoke demand, but shareholders weren’t pleased to see the prospects of even more supply hitting the market at a lower price point.
The former stock market favorite launched its Peloton Certified Refurbished program over the weekend. Under the program, interested buyers will be able to purchase refurbished interactive bikes at a price of $1,145 to $1,995. That represents a discount of up to $500 from what Peloton charges for new equipment, and the refurbished models will receive the same 12-month warranty that comes with new bikes.
Peloton has pulled out nearly all the stops in its efforts to mount a comeback. The recent introduction of the Peloton Row broadened out the company’s product line, while moves to sell equipment through third-party retailers and alternatively offer rentals have shown its willingness to consider alternative distribution channels.
The problem, though, is that the flywheel of product sales leading to accelerating subscription growth has largely stopped turning. For many, the beginning-of-year resolution season seems like Peloton’s last chance to show it can mount a successful turnaround.
The decline for WeWork was even steeper, as the stock fell 19%. The closing price of $1.06 per share put the flexible workplace specialist within shouting distance of falling into penny-stock territory.
WeWork has already had to work hard to bounce back after the departure of founder Adam Neumann prior to the COVID-19 pandemic. Lockdowns created further challenges for the office-sharing real estate specialist, but in nearly three years as CEO, Sandeep Mathrani has done well in working with businesses seeking to give their employees alternative places to work remotely. That has dramatically expanded its addressable market beyond gig workers, and WeWork has sought to boost its platform’s utility for users as well.
Yet investors still seem uncertain, perhaps because of WeWork’s structure as a special purpose acquisition company (SPAC). SPACs have overall performed poorly in 2022, and it has become apparent that many deal structures favored financial institutions and sponsors over individual investors.
The concept that spawned WeWork is still intriguing. What’s unclear, though, is what shape demand for workplace real estate will take. Unless the company makes the right choice, WeWork could have trouble getting its stock price back up.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Peloton Interactive. The Motley Fool has a disclosure policy.
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