Here’s my take on Peloton ($PTON). No, it’s not cheap now. (November 05, 2021)

by DAN PTON ZM 
Peloton ( NASDAQ: PTON ), when you think about it this company had really, really good timing when it came out. The latter quarter of 2019, it dropped at first, if you want to call a 25 percent drop bad, and then a rally off the bottom almost doubled. And then when COVID hits, down another 50 percent. COVID hits, nobody can go to the gym, nobody can do anything. You have got to sit home, and then they have some gal, who’s not fat, pretending like she is, she is insecure and she is kind of attractive, I guess, whatever. She rides her Peloton ( NASDAQ: PTON ) bike and she just rides her way all the way to success, and now they have a lot of money. So riding a Peloton ( NASDAQ: PTON ) bike is the way to go.

Anybody who has ever ridden a racing bike like that before knows, that if you ride anything like that on a regular basis you get a very sore “asterisk”, it is sore. It is not as much fun as it looks on the TV. But still, people are buying the hell out of this thing. It is going from the bottom, ultimately, all the way to the top; 850 percent, I’ll take that move. But then what happens? Well, people are starting to get sore butts I guess. We get a big move there and another move there, a higher one.

And now what are we looking at? We are looking at a head and shoulder pattern. This is something that I talked about back here, I really, really wore it out, as far as how to be trading this stock. Some of the calls were right, some of them were wrong. For example, back here, I don’t remember drawing it but I know exactly what I was looking for if this is what I drew. This is kind of like a rising wedge pattern, this is what you would be looking for, especially in a downtrend. You would be looking for the stock to be falling out here and keep going.

Obviously, the stock never did that. Instead, it ran up again. Then though, if you look at it here, this drop here, particularly if you are using common sense, is really not that surprising, because this stock was already in a complete role reversal. It went from bullish to “nothingish”, to now bearish. Lower highs, this is like a top within a top. Here’s a top and then here’s another one down here. And if you want to just look at the whole thing you could say, well, this is the head and shoulder. That is is the left shoulder, this is the head, right here, and then the right shoulder is actually this thing. So it is a big old massive head and shoulder pattern here.

When you think about it, people are wanting to come out of their caves now. I’m sure, if you went on eBay, I haven’t, you would probably be able to get a Peloton ( NASDAQ: PTON ) bike for pretty cheap. Also, success breeds competition, I think the saying is, ruinous competition, excess profits breed ruinous competition. I think that is the only thing from an economics class I remember. And so while Peloton ( NASDAQ: PTON ) is doing their thing, you’ve got Echelon. You’ve got all these different bikes that are competing with Peloton ( NASDAQ: PTON ) and they don’t have to pay for fancy commercials. They are not setting the top of the market, they are coming in underneath, and all people are trying to do is burn calories by moving their legs around in circles, so this was definitely predictable.

So now what do you do? This thing traded 84 million shares today, which means for every share that was sold, some sad sack bought it, hopefully, it wasn’t you. You could say, I am going to buy this stock, it’s cheap, I am going to get it really cheap. No, you are just getting it less expensive than you would have earlier this week. I would actually say, it is actually more expensive now. And I will tell you why, because they reported a quarter that was absolutely dismal.

In 2021 the expectation is, that the earnings per share (EPS) are going to lose $.64 per share. In 2022, the estimate is, that they are going to lose $2.19 a share. Their profit margins have gone, over the last 4 quarters relative to the same quarter the prior year, their profits have gone from up 6 to down .07, down 33.4, down 46.7. So they are losing a massive amount of money for every dollar that they make.

I am looking at this, sorry to burst your bubble “Pelotoners”, I think this can go right back to 25.00. I think it could go back to its IPO price, and I would say, even below that. And here’s why, because right here, and when it was here, this is when COVID was hitting. This is the good part of the thing, now, people aren’t really into Peloton ( NASDAQ: PTON ). And if they are looking for stationary bikes they have got a lot of other choices besides Peloton ( NASDAQ: PTON ).

One of the things that you can kind of use as an example is Zoom ( NASDAQ: ZM ). This is a great company, it’s a great product, but you look at what’s happened here, it’s the same thing. When this stock actually peaked, during the first year that COVID was around, and since then it’s been flirting with rebounding but it really hasn’t done that. So I think Peloton ( NASDAQ: PTON ) is going to succumb to the same issue that Zoom ( NASDAQ: ZM ) is. The only difference is, Zoom ( NASDAQ: ZM ) is addictive, and you don’t have to breathe hard to use it.

Once you are into Zoom ( NASDAQ: ZM ) you are into that. We are starting to use it, Peloton ( NASDAQ: PTON ), not so much. I have an Assault bike, I love it. There is a Rogue bike that I love too, actually more than the Assault bike that I have. So people have options, and Peloton ( NASDAQ: PTON ) is, I think is coasting down the hill. If you’re long, you’re wrong.

Free Chart