Here’s my take (and my rant) on Peloton ($PTON) – May 5, 2021

by DAN PTON 
I am looking at Peloton ( NASDAQ: PTON ) here or as I am starting to call it, Pelotank, that’s a Fitzpatrick original, you can use it if you want; this is totally Pelotank.

I have been talking to my members for a while about this, this is really kind of a textbook, well, it’s not a textbook, this is actually one that should be in the textbooks, head and shoulders pattern. A head and shoulder pattern is a high, a higher high, then a lower high, and it has to be within an uptrend.

You can look at any channeling stock, any stock that is trending sideways, and you are going to see this type of thing. The idea of a head and shoulder reversal pattern is, there has to be something to reverse. We know Peloton ( NASDAQ: PTON ) has been moving up here but then the real trouble comes when, let’s say this is support here, and then once Peloton ( NASDAQ: PTON ) breaks support, where is it going to find the next level of support? That was here at $100.00.

Now you can draw the neckline, which is, what was the low between this high and then the higher high? It turns out it was right there, right around $100.00. Once this high hit, then after the stock broke the trendline how low did it go before it got a bounce? If the stock had just done this and then run higher, that would be known as a higher high and a higher low. But once the stock breaks down here then how far down will it go before it bounces? Well, lo and behold, it bounced at $100.00 too.

So we got a bounce here, we got a bounce here. So what do we do? We draw a line in between the two and that is your neckline. So we’ve got a left shoulder, a head, a right shoulder, now we want to see whether this thing is going to continue lower. The measured move on this, because I’ve done it, it’s like $70.00-$75.00, which means that now once this is broken if this is going to complete itself as somebody who is dogmatic would say that it would, then it’s going to fall clear down to $20.00, $25.00.

That’s silly, I don’t think that’s going to happen at all. But what we do see happening is, this was a key trendline break. Tomorrow they report earnings. You should, if you don’t know, you should know what’s going on with Peloton ( NASDAQ: PTON ). And frankly, I am not known as the most tactful guy in the world and I don’t even try to be, so what do I care as long as I don’t curse too much?

These people are absolutely idiots. They are just idiotic what they sold. And I will say it too if you have got a baby and you are letting the baby play in the same room as you when you are running on your Peloton ( NASDAQ: PTON ) with some instructor in front of you that is telling you, you can do it, make it go faster.

That isn’t too smart because the way this stupid thing was engineered, imagine that, there is a roller that goes around, that’s your hamster wheel, that’s what you are doing, you are running around on that. But right behind it, you can get underneath it. If you look at any of the other treadmills and they are more expensive than Peloton ( NASDAQ: PTON ), hey, buy us, we’re cheap and we have instructors that really care about you on their videos. They saved money by not having any kind of a block or barrier behind it.

The Lifecycles, (I’m ranting here, you can turn off the video at any time, I won’t even know about it) these Lifecycles and other treadmills that cost a lot more money, they are actually built on a platform and you can’t get underneath the roller. It’s a platform, it’s not a couple of sticks.

And so what’s happened is, these people are running around, I am running right now, you can’t see it but I am moving my arms looking like a fool. These people are running on their treadmill while Sean or whoever it is tells them they can do it. Meanwhile, their kid is behind them playing with a toy. The ball rolls under the Peloton ( NASDAQ: PTON ), he goes under to get it, and what happens when his head or whatever hits the roller?

Have you seen these old cartoons? That’s kind of what happens, only in real life. And so these schmucks built a device like that and now they are getting punished. Tomorrow they report earnings. Now, I have a short position on this stock, I actually just took it today but I am not committed to it. I actually closed half of it today because I was up by 50 percent. Who’s not going to do that? But I still have a short position on it.

This is my thesis, I don’t see how this company can issue any kind of guidance, other than we have got this big thing on our hands and we’re not really sure what we are going to do, not really sure how this is going to play out. We don’t know what our liability is, we don’t know what our earnings are going to be. We don’t know any of that but by golly, we’re going to try really hard because we’ve got a good product and we care about people.

And they do care about people. They didn’t do this intentionally, they did it because they are trying to save money. They’ve obviously got an engineering team where nobody has any kids. If you have got a kid are you going to let them crawl around in the backyard next to the swimming pool when they are 8-months old? Answer, no. I wouldn’t even let my dog do that and she’s a Labrador Retriever that knows how to swim. So these people, there is no question about it, they are idiots on this. There, I ranted.

Now, what’s going to happen with the stock? I believe that the stock is ultimately going lower but I think it’s really easy, it’s a real easy trade to short this stock because it’s so clear. It is so clearly going to $50.00. I have never once seen a trade this easy actually work out. The easy ones, the clear ones, are the ones that will rip your face off. And so yes, I think it’s going lower and it might.

Again, I am short but I also know that it isn’t going to go lower in a straight line, shorts never do. I would look for this stock to run up, maybe tomorrow, maybe the next day, but I have got to see some kind of snapback here. And then the next time this thing peaks, and this may never do that but this is how I am mapping out my trade. The next time this thing peaks it isn’t going to be up here.

This thing isn’t going away, it happened, it is, it happened. They are going to have to recall literally every single treadmill they’ve sold. Do you know what that does? It does a lot of damage. And so at some point though, the stock will snap back, and then when it rolls over, bam, that is your entry and then you have your buy stop.

Where are you going to put your buy stop? You are going to put it right above there because if the stock runs up there after it has rolled over you don’t want to be short this stock because it is probably going to short squeeze. I think a short squeeze is coming here, it is just not here yet. I am just telling you, be really careful shorting this obvious short. It’s obvious and the obvious ones never work out because you always get in them late because, hey, now they are obvious.

Don’t be buying this thing unless it’s for a quick flip either because ultimately, it would be like Elon Musk selling all these cars, and then something happens and the solution is, everybody, you need to turn in your cars. Not just, hey, we’re recalling and we are going to put a new rear view mirror on it or something. But literally, stop using your cars, we’re coming to get them. That would be a disaster or something they should have done in the first place.

Stop using your treadmill. We don’t want to spend this money because we are cheapskates. But what we are going to do is, we are going to send you this fancy bracket that goes around the bottom of your treadmill so that you don’t kill your kid because you’re trying to deal with that big asterisk that is following you around all the time and making your pants tight. You know what? I’m out of here, that’s all I got.

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