First off, this ain’t investment advice, but I am definitely throwing this stock onto the list of companies to short mid to long-term. The strategy is simple, just wait for a double sell-off within a week, then short on the rebound up. If the reversal doesn’t get back above the previous peak (or whatever peak suits you), then you can ride this bike stock down to the dirt.
As for stock behavior, PTON reminds me of GRUB. Total hype, taking advantage of the celebrity status of being located in New York, and further, promoting their product through streamed content of self-made bike celebrity instructors. Essentially, these “celebrity” bike instructors are making evangelical movements in the bike community, and I think bike enthusiasts will look back at all this as a joke, or a “remember that time when….” Bottom line, investors are sold on an idea, which though novel, doesn’t automatically turn into revenues. I’m not here to argue the hardware obsolescence, or the low barrier to app entry to copy the concept, its the fact that this stock has rose to fast, trading as high as the mid-30s, and now testing some key support levels in the 27-29 zone. Timing the short entry can be tricky, but use GRUB full year chart as a pivot.
And finally, we’ve seen what happened to WeWork, which is a good reminder about valuations. PTON valuation at $8B is the same as Planet Fitness, and Peloton hasn’t even turned a profit yet.
Target for PTON high teens, $19.xx