My February 8th post explained why I had completely exited my Peloton (PTON) stock position, which traded at $148 on that day. The supply chain and delivery challenges in Q4 with their popular and beloved Peloton bikes, combined with higher costs, slowing revenue growth, the opening economy, backlogged product deliveries and the delayed release of their new “Tread+” product were all factors in my decision to completely exit my position.
Today’s horrific announcement reinforced that decision as urgent warnings were issued by a government agency for all their Tread+ (treadmill) products after the unfortunate death of a toddler and as many as 70 or more injuries. After initially denying responsibility and failing to issue a recall, the company has now issued a recall of more than 125,000 Tread+ machines. The stock price has been more than cut in half since its high of $171/share this year and is down another whopping 14% today alone to ~$82. The company’s failure initially to take responsibility and delay in issuing a recall certainly damaged their image and reputation and will not help their stock price.
To be clear, I am NOT a buyer of PTON stock even at this (much) lower price. I don’t invest based on the “price” of a stock…I invest based on the underlying fundamentals, the growth, and the ~20 criteria I posted yesterday…at this point PTON has far too many issues and challenges to overcome, not the least of which will be their image and the opening economy, as people go back outside to play!!
I hope you had a chance to read my blog post yesterday on the investing criteria I use…which focused on TAM and Market Cap…two more criteria I look at when considering an investment in any company. Cheers! -Poleeko
