Yahoo Finance

Now time for some of today's trending tickers. We're watching Peloton and Spotify. Joining me now, we've got Yahoo Finance Senior Reporter, Alexandra Canal. Ali, first off, we got to talk a little Peloton, getting an upgrade to buy from hold at Truist. This comes more than three years after the firm downgraded the stock. The analyst says that they believe the stock is finally nearing a point where improving fundamentals should support a gradual recovery in shares here. Those shares moving higher for Peloton by about 4.6% on this call.

Yeah, and some choice words here from the Truist analyst saying the BS has been cleared and there's a few catalysts as to why. There is a new CEO. He took the helm in January 2025 and it looks like he is prepped to deliver on those profitability metrics. Uh the company has been cleaning up its balance sheet through cost cuts. There's been several rounds of layoffs, along with reduced operating expenses, a reduction of debt. And really there's just a clear path forward when it comes to growth. So all of those are tailwinds for a company that's really just been going through it. Shares are down nearly 25% year to date. We're trading at just around $6.50 a share. Truist sees shares rising to $11. So upside between 60 to 70%, and I mean the confidence there, especially for an analyst firm that has been sitting on the sidelines for the past three years. That definitely says something, and in terms of what the company can deliver in the future, there is uptake, there's potential catalysts when you think about subscription price increases, activation fees for used equipment, new offerings, and maybe potentially strategic partnerships with companies like Lululemon, Fitbit, Amazon. So really shares have been de-risked according to this firm. But remember the heyday of Peloton, it just feels like we're never going to get back there. So what does that mean? What is the future of this company? Seems like there is a clearer story, but does that mean it's fully going to ever return to that period of dominance? I don't think so.

Oh, well, I mean, the pay, that the heyday and you could argue it was the payday for Peloton was when it was really dilemma days for the rest of us. So Exactly. Yeah. It was one of the pandemic darlings as it has widely been regarded within the market here and that scene played out within its long-term chart as well. We're also watching this next name too. Investors have their eyes on Spotify ahead of its earnings release Tuesday. Wall Street's looking for an update on the music and podcast streamers ad business, given some of the recent macro concerns here. Shares of spot down by about 2.7% right now.

Yeah, there's a few things to watch out for. Let's start with that advertising revenue. Advertising revenue makes up about 12% of total revenue for Spotify. And sources have been telling me that advertising, it's first to go when you uh have a recessionary period. So any update on that is something to watch out for, especially for a company that's so reliant on its ad business. Investors also, they're going to care about the user metrics as is always the case. For the first quarter, we are expecting gains, 2 million subscriber additions, 3 million monthly active users. Now in recent quarters margins have also been a big focus and a big driver in this recent run up that we've seen in shares. Margins have just been quite stellar, but we could see a slight dip on a sequential basis due to new investments like video podcasting, expanded music offerings that could weigh on second quarter guidance and that's another thing to watch as we continue to really monitor the impact of this current volatile period. Uh and and it it feels like we're in a moment of um transition for all of these companies, because we're not going to see a ton of impact in these first quarter results, but it's going to be a lot of what they expect in the quarters to come and whether or not we could see some of these macro concerns weigh on these companies' bottom lines.

Yeah, services and streaming services typically one of those last kind of things that consumers will cut, but we'll see how they're how they're looking through the consumer.

Right. And Spotify is relatively cheap. They they did recently raise prices. We could see more price hikes and that would be a catalyst for the stock and there seems to be a lot of room here for a company like Spotify to raise prices. I mean personally for me, I'm not getting rid of it. I will probably keep paying it. And and that's really key is how sticky are your prices and Spotify, it's not that expensive right now, but if you combo that with potentially a squeeze consumer, what could that say?

Price hikes.

Yeah, price hikes. Well, see, Daniel Ek is very cautious about price hikes.

Yeah. Yeah.

He he likes to listen to the consumer and considering we're in this time where we have this weak sentiment data, weak survey data, maybe he'll take a beat there.

I hate those price hikes for you, Ali. As you know, I subscribe to several different services.

I know. Even a dollar or $2 is a lot.

Yeah, that's true. Thanks so much, Ali. Appreciate it. You can scan the QR code below to track the best and worst performing stocks of the session with Yahoo Finance's trending tickers page.