Quantfury Gazette


Peloton is the Pandemic


We all know what to expect when we see a Market Summery.

It will have all the same information, regardless of where we are looking at. There will be the current price, where it opened and where it closed. There will be a line that is either going up or down and there will be a 52-week high and low.

However, I’m here to suggest that we should add another line that is specific to the situation that we are all living through. Let’s call it the 52P high and low. The P stands for Pandemic, obviously.

It doesn’t have to be a forever addition, but there is likely a use for it in the short turn. Certain stocks seem like they would benefit for this metric. Stocks for companies that might one day be looked at with amusement and bewilderment that they ever were popular in the first place.

They are companies that had a product or service that really only made sense in a world where we are stuck inside watching bad television. Or good television, even. The stuck inside part is the key component to this equation.

Take Peloton.

At the start of the pandemic, Peloton (NASDAQ: PTON) was hot in the early days of COVID-19. As people were getting shut out of their gyms and when they still had big dreams about staying fit during a pandemic sales boomed at the stock rose to a pandemic high of $171.09 USD during the holiday period.

The sales boomed even more that they expected or were prepared for. That latter point became an issue as a bottleneck happened in their supply chain that greatly effected their earnings. That, in turn, cased that Pandemic High to drop to a Pandemic Low of $83.81, which is where it is currently trading.

One of the big errors that that Peloton made was they moved away from their core product – the bike – to add a treadmill to their product line. There’s a surface logic to the move. It’s more exercise equipment and they are trying to reach all aspect s of what is a limited market. Not everyone wants big, clunky exercise machines in their home. So, you might not want to lose the running crowd to keep the bike crowd around.

But, if you’re going to do that you need to do it well and, as stated, they did not. They simply aren’t getting  the equipment to people.

And, then their was the recall. A tragedy in which a child died caused Peloton to recall their entire treadmill line. Companies can overcome issues like this, but when you combine it with the other issue they are having you have to start to worry that this is a single beat company that just happened to come of age at a time when it’s distinguisher is unequally positioned to take advantage of a once-in-a-lifetime global pandemic.

That we’re not out of yet, but will be soon.  

Less certain is whether Peloton can get out of its slump. The blunt truth is there is likely a ceiling to their market and that their first attempt to diversify resulted in a full re-call during a tie when they were still trying to geta handle on the growth that they were experiencing.

They might. No crystal ball here, but there are red flags.

In the end it’s just an exercise bike and people that like to go to the gym are probably going to want to go to the gym again when they can. 


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