GitLab stock has crashed in the past few months, mirroring the performance of other software companies. GTLB stock dropped to the current $37, down by 50% from its highest level in 2025. This article explores why it has crashed and whether it will rebound.

GitLab stock has crashed as concerns about the software industry remains 

The GTLB stock has crashed in the past few months as investors remained concerned about the health of the software industry. It also dropped as investors anticipate that the company will be disrupted by artificial intelligence technology.

The decline mirrors that of other software companies like Salesforce, ServiceNow, Intuit, and Atlassian, which have shed billions of dollars in value.

Analysts believe that the company’s growth will slow down in the coming years. The most recent results showed that its revenue jumped by 25% in the third quarter of last year to $244 million, while its operating margin moved to 18%.

This growth has happened as more companies have moved into its ecosystem. Some of the biggest companies in its ecosystem are Thales, Google, and NVIDIA. It has over 10,475 customers, with 1,405 bringing in over $100k in revenue.

As a result, data compiled by Gartner shows that it is the leader in Magic Quadrant for AI Code Assistants. It is also in the leadership category for DevOps platforms.

Wall Street analysts expect that the upcoming results will show that its fourth-quarter revenue rose by 19% to $252 million, while its annual figure jumped by 24% to $947 million.

Therefore, the consensus view among analysts is that its revenue growth will slow to 19% to $1.13 billion, while its earnings per share will move from $0.9 in 2025 to $1.03.

Additionally, analysts have downgraded the company in the past few weeks. Morgan Stanley downgraded it to equal-weight, with the target moving from $55 to $42. Similarly, Barclays and Cantor Fitzgerald have also downgraded to underweight and neutral.

As a result, the average target for the GitLab stock price has dropped to $50.7 from the $53 three months ago. The consensus was $76 twelve months ago.

On the positive side, the company’s valuation metrics have improved in the past few months, with the forward price-to-earnings ratio to 37. Another positive is that there are unconfirmed rumors that DataDog is considering making a bid for the company. GitLab has been exploring a sale since 2024.

Gitlab share price technical analysis 

The daily timeframe chart shows that the GTLB stock price has crashed from last year’s high of $74 to a low of $32.80 this year. It recently dropped and crashed below the key support level at $38.60, its lowest level in April and August last year. 

The stock has remained below the 50-day and 100-day Exponential Moving Average (EMA) and the Supertrend indicator. It is now attempting to retest the key resistance level at $38.60.

Therefore, the most likely scenario is where the GitLab stock price continues falling, potentially to the year-to-date low of $32. It will then bounce back later this year as jitters about the software industry wanes.

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Adobe stock price continued its freefall this week, reaching its lowest level since November 22, turning one of the best-known software companies into a fallen angel. ADBE dropped to a low of $294, down by 53% from its highest point in 2024, with its market capitalization falling from the all-time high of $288 billion to $120 billion.

Adobe stock sell-off is part of the ongoing software crash 

The ongoing Adobe stock price crash is part of the sell-off of top software companies as investors worry about disruption by artificial intelligence tools by companies like OpenAI and Anthropic.

For example, the ServiceNow stock dropped to a low of $125, down from the all-time high of $240. It has moved to the lowest level since June 2024.

Similarly, Intuit stock crashed to a low of $523, its lowest level since November 2023 and 35% below its all-time high.

Salesforce stock dropped to $220 from the all-time high of $367, making it the top laggard in the blue-chip Dow Jones Index.

Atlassian stock price moved to a low of $120, much lower than its all-time high of nearly $500. Other software companies like Box, Dropbox, Workday, AppLovin, and Autodesk have all plunged.

Analysts believe that Adobe’s business could be disrupted as AI tools by companies like Anthropic and OpenAI become more advanced. In the future, it will become possible to do most for the design solutions that Adobe offers using AI chatbots.

At the same time, there are concerns about competition in the industry, with many companies and clients opting for its competitors like Figma and Canva.

ADBE has become a bargain 

On the positive side, Adobe has become a bargain because of the ongoing crash. Data compiled by Seeking Alpha shows that the company has a forward price-to-earnings ratio of 12, much lower than the sector median of 25 and the five-year average of 30.

Its forward PEG ratio has dropped to 0.5, which is also lower than the sector median of 1.6 and the five-year average of 1.88. 

The company has also become a bargain based on the Rule-of-40 approach, which looks at a company’s revenue growth and its margins. In Adobe’s case, it has a forward revenue growth metric of 10%, a net income margin of 30%, and an EBITDA margin of 38%. This means that the company has a Rule-of-40 metric of at least 40, which makes it a bargain.

Therefore, Adobe stock price will likely react to the upcoming financial results, which will provide more information on whether its revenue and profitability growth are accelerating. Wall Street analysts expect that its revenue will come in at $6.2 billion, bringing its annual figure to $26 billion. It will then make $28.38 billion this year, while its earnings-per-share will move to $26.38 from the previous $23.46.

Adobe share price technical analysis 

The weekly chart shows that the ADBE stock price has been in a strong downward trend in the past few months, moving from a high of $642 in January 2024 to a low of $294 this week.

It crashed below the important support level at $332, its lowest level in April last year, a sign that bears remain in control. It has also crashed below the 50-week and 100-week Exponential Moving Averages (EMA)and the Supertrend indicator.

Top oscillators like the Relative Strength Index (RSI) and the MACD indicators have continued moving downwards. 

Therefore, the most likely scenario is where the stock continues falling as sellers target the next key support level at $272, its lowest level in September 2022. 

In the future, however, the stock will likely bounce back as investors go bargain hunting, especially what the company demonstrates its growth potential.

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Sandisk stock price continued its remarkable bull run this week, reaching a record high of $501. SNDK has jumped by over 100% this year, making it the best-performing company in the S&P 500 Index. 

Its surge is a continuation of a bull run that started in April last year, when it bottomed at $30. Other memory companies like Western Digital and Micron have also jumped by over 30% this year. 

These companies are beating other top players in the AI industry, like Nvidia, AMD, and Palantir.

Global memory shortage and AI boom 

Sandisk stock price has jumped because of the ongoing memory shortage as demand from data centers. A recent report showed that data centers will consume 70% of the memory chips.

Another report by ADC showed that the shortage in the industry will continue in the next few years as companies are not keen on radically increasing their manufacturing because the industry is known for its boom and bust.

The ongoing shortage means that companies like Sandisk and Western Digital are largely sold out for the year. Additionally, these companies have gained substantial pricing power. As a result, the company will likely continue delivering strong financial results this year.

The most recent results showed that the company’s growth continued in the last quarter, with its data center revenue surging by 26% to $269 million. Its edge revenue rose by 26% to $1.38 billion, while the consumer segments made $652 million, helped by the ongoing Windows 11 refresh cycle.

Sandisk’s profitability also continued rising in that quarter, with the operating income surging by 145% QoQ to $245 million.

Jensen Huang sees the AI boom continuing 

Sandisk stock price jumped after Jensen Huang, the head of Nvidia said that the boom was continuing and that its supply was largely sold out for the year. This explains why other companies in the AI industry, including Micron and Western Digital, surged on Wednesday.

Wall Street analysts believe that Sandisk’s business will continue booming. The upcoming results are expected to show that the revenue rose by 42% in the last quarter to $2.6 billion.

Analysts also expect that the annual revenue will be $10.94 billion, up by 48% YoY. However, they also expect that the revenue growth will slow down to 29% to $14 billion in the next financial year.

Still, there are some potential risks that the SNDK stock faces. For example, the current stock price is much higher than the consensus estimate among analysts. The consensus is $327, implying a 34% drop from the current level as the chart below shows.

Additionally, there is a risk that the company will experience an inventory challenge in the next few years if the AI boom stalls.

The stock has also become highly overvalued, with its forward price-to-earnings ratio rising to 34, higher than the sector median of 24. As such, there is a risk that it will drop when its upcoming results on January 29th comes short of expectations.

Sandisk stock price technical analysis 

Technical analysis suggests that the stock may crash soon too. For one, it remains much higher than the 100-day Exponential Moving Average (EMA), which is at $218. This means that the stock may crash because of the concept known as mean reversion.

Additionally, oscillators suggest that the stock has become highly overbought. The Relative Strength Index has moved to the overbought level of 86.

Therefore, these indicators mean that the stock may drop soon as investors start to book profits. If this happens, the next key support level to watch will be at $400.

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Workday stock price continued its strong downward trend in the past few months, reaching a low of $180, its lowest level since May 2023. WDAY plunged by 40%from its highest level in February 2024. This article explores some of the top reasons why the stock has crashed and whether it is a good buy.

Why Workday stock has crashed 

Workday stock has been in a strong downward trend in the past few months, mirroring the performance of other software companies like Adobe, ServiceNow, Intuit, Atlassian, and Box.

The ongoing crash is mostly because of the fear that Workday and other software companies will be disrupted by tools made by companies in the artificial intelligence (AI) industry, like Anthropic and OpenAI.

Additionally, investors are concerned that the AI tools they have developed will take time to become popular and start generating substantial sums of money over time.

Workday has launched its AI tools, including the Agent System of Record and other AI agents. It has also incorporated AI features across all its products. Still, analysts believe that the revenue and profitability growth from these services will take time.

Additionally, the Workday stock has plunged because of the ongoing valuation reset since it was once one of the most highly valued companies in the US. The average price-to-earnings ratio in the last five years was 50, much higher than the S&P 500 average of 22.

READ MORE: Intuit stock price gets oversold and cheap: is it safe to buy the dip?

Workday revenue growth is decelerating

The Workday stock price has crashed because analysts expect that its revenue growth will decelerate over time. Data shows that its revenue grew by 20% in 2024, followed by 16.78% and 16.35% in the next two consecutive years.

The most recent results showed that Workday’s revenue rose by 12% in the third quarter to $2.43 billion, with its subscription revenue hitting $2.24 billion. Its free cash flow rose by 53% to $549 million.

Wall Street analysts believe that Workday’s revenue growth will continue to decelerate in the coming years. The average estimate for the annual revenue in 2025 is $9.57 billion, up by 13% YoY. Analysts also expect the numbers to show that the revenue will jump by 12.3% this year to $10.75 billion.

Still, there are some reasons to remain optimistic about Workday as its stock crashes. First, the current stock price is 50% below the consensus average among 39 analysts. These investors believe that the stock will continue growing in the coming months. 

Second, most of the solutions will be hard to disrupt by artificial intelligence. This means that its business will likely continue doing well over time.

Third, the ongoing WDAY stock crash has led to significantly lower valuation metrics. For example, the forward price-to-earnings ratio has dropped to 20, lower than the sector median of 24 and its five-year average of 50.

Workday stock price technical analysis 

The weekly chart shows that the WDAY stock price has crashed in the past few months. This crash happened after the stock formed a descending triangle pattern whose lower side was at $205. The upper side connected the highest swings since December 2024.

It has now plunged below all moving averages and the lower side of the triangle pattern. It moved below the 61.8% Fibonacci Retracement level and the Ultimate Support level of the Murrey Math Lines tool.

Therefore, the stock will likely continue falling, potentially to $150 and then rebound later this year. 

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The Vanguard S&P 500 ETF (VOO) has moved sideways in the past few weeks and is hovering near its all-time high as the earnings season continues. VOO was trading at $630, a few points below the all-time high of $640. While the fund has bullish catalysts, there is a likelihood that it will suffer a reversal soon.

VOO stock is flashing bearish signals 

The daily timeframe chart shows that the VOO stock price has been in a slow uptrend in the past few months. It jumped to a record high of $640, up by 45% from its lowest level in April  

However, there are signs that the index has formed a rising wedge chart pattern, which is made up of two ascending and converging trendlines. 

The upper side of this pattern connects the highest swings since October, while the lower side connects to August last year. These two lines are now nearing their confluence, where bearish breakouts happens.

The fund has also formed a bearish divergence chart pattern, which happens when oscillators are moving downwards as the asset continues rising. The Percentage Price Oscillator (PPO) has been moving downwards and the two lines are nearing their zero line.

Also, the Relative Strength Index (RSI) has formed a descending channel. Therefore, the ETF will likely have a bearish breakdown in the coming weeks, with the next key target being at $600, its lowest level on November 21.

On the other, a move above that all-time high of $640 will invalidate the bearish outlook and point to more gains, potentially to the resistance level at $700.

VOO ETF stock | Source: TradingView 

S&P 500 Index retreat could be brief 

A S&P 500 Index pullback would be a normal part of the uptrend. For example, the ETF pulled back by over 6% from its highest point in October to the lowest level in November last year.

The view mirrors that of Tom Lee, the founder and chief analyst at FundStrat, a top analytics company and the Chairman of BitMine, who believes that the S&P 500 Index may drop by between 10% and 20% and then rebound.

US stocks have numerous catalysts this year. For one, the Federal Reserve will likely continue cutting interest rates this year. A Polymarket poll shows that most traders expect the bank to deliver three rate cuts this year.

The stock market normally does well when the Federal Reserve is cutting interest rates as we saw during the COVID pandemic.

Meanwhile, corporate earnings are doing well. About 7% of all companies in the S&P 500 Index have published their fourth quarter results, with the average earnings growth being 8.2%. If this is the final figure, it will be the tenth consecutive quarter of earnings growth.

Analysts believe that corporate earnings will be strong this year as demand continues rising in the United States and other countries.

Meanwhile, there are signs that the Supreme Court will end Donald Trump’s tariffs in a ruling that could come as soon as this month. Such a move would be good for companies in the S&P 500. However, the impact would be short-lived as Trump has tools to reimpose his tariffs.

The S&P 500 Index will also benefit from the ongoing artificial intelligence boom, which will likely continue in the foreseeable future. Just this week, Jensen Huang noted that his chips supply were largely sold out for the year.

There are odds that corporate activities will surge this year. BitGo has already filed its IPO, and more companies like SpaceX and Anthropic will go public this year.

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Amazon stock price has pulled back in the past few months, moving from a high of $258 in November to the current $230. It has also formed a risky chart pattern, pointing to more downside ahead of its earnings.

Amazon stock price technical analysis suggests more downside

The daily timeframe chart shows that the AMZN share price has pulled back in the past few months, moving from a high of $258.71 in November to the current $230. 

It has crashed below the 50-day Exponential Moving Average, confirming that bears are in control for now. Also, the Supertrend indicator has turned red, which often leads to more downside  

Most importantly, the stock has formed the highly bearish chart pattern known as a head-and-shoulders. Its head is at its 2025 high of $258, while the shoulders are between $238 and $250.

Therefore, the most likely scenario is where the stock continues falling in the coming weeks as sellers target the next key support level at $210, which coincides with the 50% Fibonacci Retracement level. On the flip side, a move above the key resistance level at $250 will invalidate the bearish outlook.

AMZN stock chart | Source: TradingView

Amazon earnings to be the key catalyst 

The next major catalyst for the Amazon stock price will be its earnings, which will come out on February 5. These results will provide more information about its performance in the last quarter and its growth in the cloud computing industry.

The most recent results showed that Amazon growth continued in the third quarter. Its revenue rose by 13% in the third quarter to over $180 billion, with North America bringing in $106 billion and AWS making over $33 billion. Its international business made over $40 billion 

Amazon’s operating income was flat at $17.4 billion, while its net income jumped to $21 billion. Its net profit benefited from the gains from its investments, a figure that may continue rising this year because of Anthropic’s gains.

AWS continued growing, with its operating profit of $11.4 billion being much higher than that of international and North America combined.

Data compiled by Yahoo Finance shows that analysts expect Amazon’s revenue rose by 12% in the fourth quarter to over $211 billion, while its earnings per share jumped by 5% to $1.95  

Analysts also expect that Amazon’s annual revenue will jump by 11% this year to $794 billion. Its earnings-per-share is expected to come in at $7.88, up from $7.07 last year.

There has always been a challenge for identifying the real value of Amazon because of how its business is structured. Unlike other companies, Amazon is made up of two businesses in different areas. It has the slow-growth and low-margin business, which brings in the most revenue and the least profits.

On the other hand, it has the AWS business, which powers the world today. It is the workhorse behind most companies, including Netflix, Twitch, Spotify, Canva, Pfizer, and Adidas. This business generates quality recurring revenue with high margins, meaning that it needs a higher valuation multiple.

Amazon has a forward PE ratio of 32, higher than Microsoft, which has a multiple of 28. Ideally, Microsoft should have a higher multiple than Amazon because of its business model, its faster growth, and higher margins. Microsoft has a profit margin of 35, higher than Amazon’s 11%.

READ MORE: AWS outage exposes global dependence on Amazon’s cloud network

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The FTSE 100 Index wavered this week as investors reacted to the geopolitical developments between the UK and the US. It was trading at £10,150, a few points below the all-time high of £10,260. This article looks at some of the top FTSE 100 shares to watch next week.

Lloyds Bank will be the top FTSE 100 stock to watch

Lloyds share price has been in a strong uptrend, and is now hovering at its highest level since 2008. This surge has mirrored that of the top European banks like Barclays, Société Générale, and UniCredit. 

The company did well as its revenue and profitability growth continued amid a period of higher interest rates. Also, it is nearing the end of the motor vehicle insurance resolution, while Rachel Reeves did not include a windfall tax in her budget. 

Lloyds stock will be in the spotlight next week as it releases its fourth quarter and full year results. Analysts expect that the net interest income will be £3.54billion, while its full-year will be £13.64 billion. They also expect that its annual revenue will jump to £15.02 billion in 2026, followed by £16.15 billion and £16.9 billion in the following two years.

Airtel Africa (AAF)

Airtel Africa stock has done well in the past few years, helped by its continued market share gains in key areas like money transfer, data, and voice. It has soared to 360p, up by over 330% from its lowest level in 2024. 

Airtel Africa will be a key FTSE 100 stock to watch as it publishes its financial results. The most recent results showed that Airtel Money’s users jumped to over $200 billion, up by 35% YoY. 

Its revenue rose by 25.8% to $2.9 billion in the half year, while its operating profit soared by 35% to $959 million. Therefore, the upcoming results will provide more information on its growth trajectory.

EasyJet (EZJ)

EasyJet is another top company in the FTSE 100 Index to watch. Unlike IAG, which has soared in the past few years, it has been relatively volatile in the past few months. EasyJet stock price has dropped by over 16% from its highest point in 2025.

The most recent results for the financial year ending on September 30 showed that its EBIT jumped by 18% to over £703 million, while its profit before tax rose by 9% to £665 million.

As a result, the management is working on achieving its medium-term targets of having over £1 billion by 2030. The upcoming results will provide more color on whether it is achieving this goal.

Chances are that the company will publish strong results next week. 81% of the first quarter was already sold when it published it financial results in November.

Still, the company has faced challenges, which explains why its stock has underperformed. For example, it experienced challenges during the winter season, while Airbus’s delivery delays have affected its growth.

The other top UK companies to watch next week as they release their results are Wizz Air, Pets at Home, Hilton Food Group, and Rank Group. 

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The GME stock price popped by over 6% on Thursday as investors cheered its ongoing turnaround, and after Ryan Cohen, the Chief Executive Officer, bought 1 million shares in a sign of confidence in the embattled company. GameStop rose to $23, up from the year-to-date low of $20.

GME stock price rises as CEO continues buying 

GameStop, a company that sells gaming consoles, collectibles, and video games, received a boost when the CEO bought 1 million shares, bringing his total ownership to 9.3%.

The purchase came a few weeks after the board gave him a big incentive to boost the stock price and profitability. He will receive the option to buy millions of shares at $20 each if the market capitalization jumps from the current $10 billion to $100 billion and if the EBITDA hits $10 billion.

Insider purchases are some of the best catalysts for stocks because these people often have privileged information that the rest of the public lacks. For example, the Atlassian stock price has crashed sharply in the past few years as key insiders have continued selling the shares.

GameStop also continued to shut down stores in the United States. It has already shut down over 1,000 stores in the past few years, and the management expects to cut over 400 more this month.

Store closures can help a company remove the least productive ones in a firm. It then helps maintain the most profitable ones while cutting costs.

GameStop’s business has come under pressure in the past few years as demand for games and consoles from retailers has softened a bit. More customers have continued to buy consoles and games online, a trend that will likely continue in the foreseeable future.

Therefore, its annual revenue and profitability has been in a strong downward trend in the past few years. Its annual revenue moved from $8.2 billion in 2019 to $5.2 billion in 2024. Analysts expect that its annual revenue in 2025 will be about $3.8 billion. In the future, there is a likelihood that the revenue will tumble below $1 billion in the next decade.

GameStop’s pivot to Bitcoin accumulation has also not worked as it happened when Bitcoin was in a strong downward trend, and demand for Bitcoin treasury companies has waned. Most of the MicroStrategy copycats are at a loss, and it is unclear whether they will rebound soon.

On the positive side, GameStop has a great balance sheet, helped by the capital raising it engaged in during the meme stock frenzy in 2021. It has over $7 billion in cash and little debt.

GameStop stock price technical analysis 

The daily timeframe chart shows that the GME stock popped this week after Ryan Cohen’s purchases. This rebound happened after the stock formed a double-bottom pattern at $20 and a neckline at $24. A double-bottom is one of the most common bullish reversal signs in technical analysis.

The stock formed an up-gap on Thursday and is now above the 50-day and 100-day Exponential Moving Averages (EMA). Therefore, the most likely GME stock price forecast is bullish, with the next key target being at $25.

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PayPal stock price continued its strong downward trend this week as it plunged to the lowest level since November 2023. It lost a crucial support level as sellers remained in control and the short interest rose to 4.8%. 

PayPal has become a fallen angel 

PayPal stock price has crashed in the past few years, mirroring the performance of other fintech companies. For example, Block, formerly known as Square, was trading at $62, down sharply from the pandemic high of $288.

Similarly, Fiserv stock dropped to $64.50 from last year’s high of $238, while Remitly has slumped to $13 from the all-time high of $53.

PayPal stock price has crashed as investors have remained concerned about its revenue growth across its branded and unbranded checkout businesses.

PayPal’s branded business involves checking out by clicking the PayPal button, while its unbranded business largely revolves around Braintree, the business it acquired in 2013.

These businesses have come under pressure in the past few years, even as the volume of e-commerce transactions has jumped sharply. The main issue is that competition has continued rising, with buy now, pay later (BNPL) companies like Affirm, Klarna, and AfterPay taking a substantial market share.

Many PayPal users have also shunned it because of its substantial fees, which average between 2% and 4%. 

Analysts believe that some of these customers will move to stablecoins like PayPal USD (PYUSD), Ripple USD (RLUSD), Tether (USDT), and USDC. These stablecoins normally charge pennies per transaction and are usually instant. 

All these issues have made PayPal a slow-growing company. Data compiled by Yahoo Finance shows that the average estimate among investors is that the upcoming earnings will show that its revenue rose to $8.79 billion in the fourth quarter, up by 5% YoY.

That revenue will bring its annual figure to $33.27 billion, up by 4.65% YoY. PayPal is also expected to make $35 billion this year and an earnings-per-share (EPS) of $5.76.

PayPal has become a bargain, but this could be a value trap

The company’s slow growth has made it an undervalued company. Data compiled by Seeking Alpha shows that the non-GaaP forward price-to-earnings (PE) ratio has fallen to 10, much lower than the five-year average of 23. It is also lower than the forward S&P 500 ratio of 22 and the sector median of 11.5.

The forward PE ratio based on the GaaP metric stands at 11, also lower than the sector median of 12. 

PayPal is taking measures to boost its stock. For example, it has now started to deploy its cash to paying dividends to its shareholders, with the yield being at 0.85%.

The company has also repurchased stock worth billions of dollars over time. As a result, the number of outstanding shares has been in a strong downward trend, moving from 1.17 billion in 2021 to the current 971 million.

Share repurchases are a sign that the management believes that the stock is cheap and is a way for the company to boost the earnings per share.

While all these activities are good for the company, they mean that it has moved from being a growth company to a value one. There are also concerns that the company’s cheap valuation makes it a value trap.

PayPal stock price technical analysis 

The daily timeframe chart shows that the PYPL stock price has been in a strong downward trend after peaking at $79.43 in July last year.

It dropped below the important support level at $55.72, its lowest level in April last year. Losing that support level was important as it confirmed the bearish outlook.

The stock remains below the 50-day and 100-day Exponential Moving Averages (EMA), while the Relative Strength Index and the MACD have continued to move downwards.

Therefore, the most likely scenario is where the stock continues falling, with the next key support level being at $50 followed by the next psychological level at $45.

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Peloton stock price has come under intense pressure in the past few months as its growth trajectory waned and as insiders dumped shares. PTON dropped by over 7% on Tuesday, reaching a low of $5.85, its lowest level since May last year. It has tumbled by 35% from its October highs and formed a risky pattern, pointing to more downside. 

Peloton is seeing some improvements as core headwinds remain

Peloton Interactive, a company that thrived during the pandemic, is facing major headwinds as the management continues to turn around the business.

The most recent results showed that the company’s revenue dropped by 6% in Q1’26 to $551 million. This revenue was much higher than its previous guidance.

Peloton’s gross margin dropped by 30 basis points to 51.5%, while its net income rose to $14 million. This profitability growth was mostly due to its cost cuts, including one announced in August last year. 

In addition to cost cuts, the management has made some major developments aimed at boosting its sales. It launched Peloton Cross Training Series, its biggest upgrade across its bikes, tread, and row products.

The company also launched Peloton IQ, its entry into the artificial intelligence industry. It also acquired Breathwrk, an application that helps users achieve calm, energy, and focus.

And this week, the company became the latest big name to sue the Donald Trump administration for its tariffs. It hopes that the Supreme Court will rule against these levies and push the administration to refund companies.

Still, the company continues to face major challenges, including the elevated competition from other companies that manufacture treadmills and exercise bikes.

Analysts also expect that its revenue growth will remain under pressure in the coming years. The average estimate among analysts is that Peloton’s annual revenue will drop by 0.44% this year to $2.48 billion. 

They also expect that the revenue will recover modestly in the next financial year to $2.51 billion. Additionally, the earnings per share (EPS) is expected to improve from 15 cents this year to 20 cents in the next financial year.

Valuation concerns and insider sales

Peloton Interactive’s short interest has jumped recently to nearly 17%, a sign that many investors expect the downtrend to continue. 

At the same time, some of its insiders have continued selling the shares. Data shows that these insiders have sold shares worth over $30 million in the last 12 months. Insider sales is often seen as a red flag because these officials have privileged information about the company. 

Meanwhile, there are concerns about the rising outstanding shares, which have jumped to 390 million from 270 million in 2021. Rising outstanding shares has an impact on a company’s earnings per share. Peloton is also highly overvalued as it has a forward P/E ratio of 46.

Peloton stock price technical analysis 

The daily chart shows that the PTON stock price has pulled back in the past few weeks. It has dropped from a high of $9.19 in October last year to the current $5.86. 

The stock has moved below the key support level at $6, the neckline of the head-and-shoulders pattern. It also formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other.

Therefore, the most likely Peloton stock forecast is bearish, with the next key target being at $5. A move below that level will point to more downside to $4.65, its lowest level in April last year. This target is about 21% below the current level.

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