Peloton’s 81% decline gets it kicked out of the Nasdaq 100 just one year after its inclusion

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE) Spencer Platt/Getty Images

Peloton is set to be kicked out of the Nasdaq 100 index after its stock price fell 81% from its record high.

The connected-fitness company was originally added to the tech-heavy index in late December 2020, meaning the company will only have been in the index for about 13 months. Shortly after Peloton was added to the index, its market capitalization hit a record $48 billion. Today, Peloton is worth about $11 billion.

Peloton initially saw a surge in business amid the COVID-19 pandemic, as closed gyms led to consumers flocking to home-exercise products. The demand was so strong for Peloton’s bikes that its scheduled delivery time was delayed by several weeks. 

Peloton’s strong demand ultimately caught up to supply chain disruptions, which extended its delivery times even further and limited the company’s ability to meet the high influx of orders. From there, a product recall for its treadmill, concerns about demand in a post-pandemic world, and a hawkish pivot from the Federal Reserve have contributed to the stock’s sizable decline.

Peloton is set to be replaced by Old Dominion Freight Line prior to the market open on January 24. The changes will impact the Nasdaq 100, the Nasdaq 100 Equal Weighted Index, and the Nasdaq 100 Ex-Technology Index.

The swap between Peloton and Old Dominion sums up the ongoing rotation in the stock market, as value stocks become the preferred holding for investors concerned about rising inflation, higher interest rates, and the Fed’s indication that it plans to shrink its balance sheet.

Shares of Peloton traded down about 4% in early Friday trades following the index change announcement.