Is Peloton Too BIG to Fail?

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Peloton has been dropping today about 5% with very unusual activity. With?Omicron spreading as fast as Covid-19 ?did in early 2020, this lockdown stock declining this much is counter-intuitive.

According to preliminary estimates, every person with Omicron is infecting?3–3.5 others , which is roughly on par with how fast the coronavirus spread when it first went global in early 2020. This suggests that a significant Omicron wave (less severe but more cases) is coming.

What makes things move in a sentiment based equity bubble? Peloton’s Bike drove a plot point in the first episode of HBO Max’s “Sex and the City” reboot. The home exercise company is struggling with slowing sales and public relations challenges, including the voluntary recall of its treadmill earlier this year.

Shares of the company are down 73% this year! That’s nearing a buying opportunity. Pandemic lows for the stock price were $19.72. Today the stock is down to $38.60. It has a market cap today of $13.5 billion.

The average stock analysts price target is $79. I would be tempted to enter a starter position for the long-term at below $32. The safest way to invest is to follow the trends of the 5-year chart.

The?revenue growth of the company? in the last few years has been impressive. On some level in America, all publicity is good publicity. While a few injuries and deaths are tragic, they aren’t going to kill the exercise at home reality of living in a pandemic.

Peloton was widely seen as a pandemic winner last year, along with home improvement companies and streaming services. As people stayed at home and skipped the gym, they bought equipment and set up their own home fitness studios. If you believe an Omicron wave will lead to furthering restrictions, ticker $PTON isn’t a terrible swing play idea.

A lot of high-growth pandemic stocks are?now in a technical bear market?since absurd February, 2021 highs. Peloton, Lightspeed Commerce, Zoom, Roku, Teladoc, Robinhood, Square, PayPal, Stitch Fix and others come to mind. As a swing trader, volatility is your friend.

• Peloton
• Lightspeed Commerce
• Zoom
• Roku
• Teladoc
• Robinhood
• Square
• Paypal
• Stich Fix

So much of stock prices is about guidance in this weird high-inflation environment. In recent weeks, Peloton has slashed?its full-year forecast and frozen hiring . All I know is I won’t be going to the gym much in early 2022, not that I own a Peloton device.

The stock price declining on the news of the show is pretty hilarious.?Mr. Big, played by Chris Noth, collapsing and then dying after a Peloton workout. Mr. Big was the on-again-off-again love interest of protagonist Carrie Bradshaw (Sarah Jessica Parker). It’s one of the funniest things I’ve heard about this week.

In response, Peloton pointed to Mr. Big’s unhealthy lifestyle choices as the likely cause of his demise — rather than the fact that his death was precipitated by his use of the company’s exercise bike. Real or not, I think Peloton’s valuation is approaching levels where there is some upside owning some of the stock if you are a long-term believing in the workout from home trend.

December is a time to trim portfolios, diversify better geographically, sell stocks for taxes and make some long-term bets. Keep in mind equities are likely in a massive bubble. Still there’s so much liquidity and confidence has been propped up by the Fed and global central banks that a new wave of retail investors and more aggressive investing from hedge funds mean volatility could be ahead for 2022.

Peloton may want to hire a Hollywood type to vet its products being used in the movies ... because it allowed "And Just Like That..." to kill off one of its characters on the bike and Peloton's stock went into freefall.

Here is a company with $4 Billion in revenue and a 52-week high of a stock price of $171. So many SPACs and lockdown stocks have fallen, and they’ve fallen hard. With all the wild speculation in crypto that is occurring and tightening ahead, growth-stocks could be a bit dangerous.

Peloton’s portrayal in “Sex and the City” could point to potential trouble with brand as their PR has been pretty bad recently. A product that is dangerous to toddlers is of course not a good look.

Peloton was among the “stay-at-home” stocks that experienced a surge during COVID lockdowns, as people stopped going to gyms. We could easily be in such an environment again in a month or two in my humble opinion. What do you think? Let me know in a comment below.

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