Peloton (PTON)- Just another WeWork GrubHub Stock and Why You Should Avoid It

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

Using the SEC Chess Moves to Time A Significant Market Reversal

The year 2019 will be known in the world of investing as the year of the trade war. If there’s one thing we’ve learned, its that when the market can be shook by a single tweet of a bird brain, then we have to focus on the underlying reasons of the sensitivity. Its that sharp pain in the back of your mouth when you drink a glass of cold water or chew on your favorite Trader Joe’s chocolate.

That chocolate in the investor’s world is any news regarding trading with China. People complain every time Trump puts out a tweet, but when there is silence, we grow impatient, bored, and thus, craving for just a piece even though we know it will send sharp pains in our portfolio depending on the adjectives of the Donald’s words.

So how is all of this related to accounting? Well, it goes back all the way to 1929, when the fate of the market was dictated by rookies, teenagers behind the wheel of a Ferrari. Don’t worry, I’m not one of those doomsday stock prognosticating lunatics decked in 1929 chart comparisons. Rather, its what was born from the crash of 1929, the SEC, which was created for the purpose to, “protect investors, promote fairness in the securities markets, to help investors make informed decisions and invest with confidence.”

Here are the five offices, referred to as “the commission,” (how mafia-like), that have been at hard work these past few years thanks to the tightening of global markets:

  1. The Division of Corporate Finance – so whenever a company like Lukin Coffee (LK) wants some American capital, this division will review their filings. They make sure that their coffee is legit.
  2. The Division of Enforcement – as the job title shows, they police the market.
  3. The Division of Trading and Markets – they oversee secondary markets, exchanges, brokers and dealers. I imagine they have all the fun dealing with terrorists laundering money through securities and insurance.
  4. The Division of Investment Management – they oversee investment advisers and investment companies.
  5. Division of Economic and Risk Analysis – You gotta love divisions that were born from crisis. In this case, it was the 2009 credit risk crisis. You better believe that the Government is trying to avoid a 1929 disaster by focusing a lot on data and analytics.

So, how does this elite government gang, quite possibly the most unknown and yet most influential force in the world, matter to you, you speck of dust? Its important to note that what matters to this President-elected group should matter to you. Often times, the SEC will create laws and entire divisions after a massive economic crisis has bulldozed through the economy. Other times, they will try to pass laws for preventative measures. These preventive acts for potential scenarios are worth focusing on.

Every now and then, the SEC will pass major Acts to put the market back on the tracks. These Acts are very rare, but I’m speculating, is that the time period between Acts being passed is shrinking. It was first the group of Acts passed in the late 1930s, such as the SEC Act of 1933, 1934, the Investment Company Act of 1940, then it took another 30 years for the Investment Advisors’ Act of 1970, then more recently, another 30 years, the Sarbanes-Oxley Act of 2002. In my opinion, if the market were to face a serious correction, it would be within the next 2-3 years, as we are due for another “Act”. And the way the President and the “Commission” of the SEC are hinting towards something about Foreign or International Trading. Let’s have fun with it:

  1. The Securities Acts of 1933 and 1934
  2. The Public Utility Holding Company Act of 1935
  3. Trust Indenture Act of 1939
  4. Investment Company Act of 1940
  5. Investment Advisors’ Act of 1940
  6. Securities Investor Protection Act of 1970
  7. Sarbanes-Oxley Act of 2002
  8. ??? Foreign Investing for Dummies Act of 2022

There’s just too much risk, unknowns, power shifts, and unregulated backdoor transactions in foreign markets and the pressure is building on the US to try and juggle everything with hands tied behind their back. There’s a good psychological analogy about this- about adding one more ball to a juggler. Soon, there will be another country, another scandal, one more war, one more tariff, whatever it is, then all the balls will drop. Just something to keep in the back of your mind my fellow investors, the US is the boss of the Global Market, but when you’re on top, you’re also the top target.

OKTA, The Company You’ve Been Looking For

Okta Inc product, Okta Identity Cloud is a relatively unheard of, yet massively practical product in today’s tech run economy. Instead of chasing the classic cloud stocks, like DropBox, Amazon, Microsoft, SurveyMonkey, the real potential is in the service side of cloud technology. Just look at the rise of Twilio (TWLO) for communication, and MongoDB (MDB) for database. These crowded two have had their run and are due for a pullback, but OKTA is just beginning its momentum. They report today, and there is no way I’m shorting this. I’m also not going long, as I would rather watch from the side and see if its 1-month low volume rally will be wiped out. Still, the risk-reward is to high on the bear case, so if it does drop, it would be better to open a position on healthy profit-taking. In the long run, this stock should double in a year or two, with the market-cap being attractive and its revenues on track to $500M-600 for the year (doubling every year the past 3 years).

Holiday Portfolio Cleanse: Covered 1/2 ETSY +25%, 1/2 CVNA -4%, 1/2 YELP -1%; New shorts SFIX

Covered ETSY +23%

Covered CVNA -4%
Covered YELP -1%

Short SFIX @23.87

Covered ETSY for another solid swing trade. Been short this stock in the 70s, near the top. Averaging in on the way down, so although I do have a +60% gain, on average I’m closer to 25% as I built position to 4x. Stock is very weak, and will go lower. But beware of this broad market, it’s getting ready to destroy some rookie bears and will send ETSY higher. So why haven’t I covered all? If you don’t know, then trade a little more, you’ll get what I mean. Meanwhile, it tapped 30s earlier last week, and probably should have covered, but waiting for those waterfall type drops is where you make those gains that are worth the slight rebound. ETSY is a good candidate for a steep drop.

Entering a position in SFIX, which has more unusual activity. I’ve traded SFIX very successfully, and until I’m proven wrong, I’m going to continue with my reads.

Back to that idea that the market is ready to rip higher to new highs and even newer highs. As a bear/contrarian trader, I respect that. I’ve hedged with my longs, and I’m willing to cut wrong trades on stocks that are going against me, hence I covered half of CVNA for a -4% loss

… I swear, this stock has proven me wrong over and over. Keeping this position thin, like at 1/4 position, is what lets me get the trade wrong and psychological negativity out of the way so I can move on to other trades.

What the Truck is this Thing- Tesla’s CyberTruck

That font is ridiculous, but the tires and lights look pretty cool. Other then that, why does this truck look like a glass roof with wheel?

As for the stock, TSLA has been out of my portfolio ever since my broker has been bugging me with the risks of going long this stock, even though I went by my principles of “buying the panic” and entering in the mid 200s. After this reveal, I’m joining the ranks of the rest of herd, and just wait and see how everyone reacts to this.

CRON Squeeze Intraday + VFF possible squeeze in-play; URBN danger zone could tank hard

Battered pot stocks (the worst performing industry) are setting up daily day-trading setups, on the long and short. I’m on the sidelines having sold CRON longs pre-earnings. Lot of shorts covering.

VFF, another heavily shorted stock, is due for a massive rebound, as there are a ton of shorts that need to be covered soon before the end of the year. If 6 holds for the week, I’m expecting a jump on Friday.

I’m sitting out of URBN which reports today. Its rallied off its August low of 20.51, but a Q4 miss can send this stock down hard. I’m putting the brick-mortar retailers on my radar for a long-term short, the basket will include: TJ Max (TJX), Dollar Tree (DLTR), and Ros (ROST), while holding longs in JWN (Nordstrom). Kohl’s is the first domino piece to fall on a Q3 earnings miss today. Will be an interesting week for retail.