This stationary bike isn’t standing still. Here’s how you hop on a Peloton ($PTON). (May 07, 2020)
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I want to talk about Peloton ( NASDAQ: PTON ) today. The company reported earnings yesterday and the stock really popped and then it actually held through last night’s after market session and then even this morning. The stock was really strong in the post market last night and the pre-market today. And then once the stock opened up it actually did; it traded higher for a second and then it fell back down but it didn’t fall far. You could say it’s like a gap and crap and it did retrace a fair amount. It fell 10 percent from the high but then it ultimately gathered steam.
So what’s to make of this? Well, I will tell you something, I want to look at just the chart. As far as what the company does and all of that I think it is a mistake to just be looking at this Peloton ( NASDAQ: PTON ) company as one that makes those cheesy racing bikes with the commercial about it that people talk about. For me it is kind of stupid but that is why I am not in marketing I guess because they are selling a lot of bikes.
I think there is a lot more to the company than just that. I am not bullish, I am not bearish, I don’t think the company is awesome, I don’t think it sucks, I just don’t know, I truly don’t know. But this is one thing that I do know: The short interest on this stock is huge, 40 percent of the float is short and that makes sense. If I were an institutional money manager I wouldn’t have touched this stock at all.
I wouldn’t have ever thought about it but I also wouldn’t have been ever owning Tesla ( NASDAQ: TSLA ) stock. And look what would have happened to me, I would have been absolutely crushed. And why? Just because there are a lot of issues that I have with the company, not so much with the stock now but with the company and that would color my view as an institutional money manager, as somebody who’s running a lot of stock. I am not that guy but there are plenty of other people out there who are that guy.
This is what I am talking about, there are people out there that are looking at Tesla ( NASDAQ: TSLA ) and they swear that it’s going to be a $7.00 stock. I’m agnostic, I don’t know but there are people out there and they are betting against it and they are getting their faces ripped off.
You can say the same thing about Peloton ( NASDAQ: PTON ). I would never buy this stock; it just doesn’t work for me. However, at some point as a money manager it might. Look at this, it’s an IPO and it is on a clean breakout. I don’t know what the relative strength on this is, actually I do now, it’s at 98.00 so this stock is monstrously strong. It is really, really strong relative to other stocks in the market so I might buy this as an institutional guy.
But the main thing that I want to point out to you is the very, very high number of shares that are short. So what’s the trade?
(1) I wouldn’t be bearish on this stock; there is too much buying going on.
(2) I wouldn’t be buying this stock because it’s been up here and now it’s down here. It’s as simple as that.
(3) I would be buying the stock if it runs above 45.70.
If this runs above 45.70 that means that literally every single short seller is losing money on every single share of stock that they are short. And at the same time every owner is making money on every single share of stock that they own. And this is just the kind of stock that really sparks the attention of kind of the fast-acting hyperactive traders who are looking for the thing that moves to most on any given of day. So 45.71 is your entry on this stock. Give it about 5 percent room to move and that’s your trade. And by the way, 45.71 doesn’t mean really 45.00, it means wait for 45.71, wait for it to hit a new high and it probably will.
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