No matter the details, Peloton Interactive (PTON) is in big trouble...
The Power Gauge Is All Over Peloton's Road to Nowhere
By Carlton Neel, CEO, Chaikin Analytics
No matter the details, Peloton Interactive (PTON) is in big trouble...
News reports last Thursday indicated that the fitness-equipment maker would temporarily halt production due to slowing demand. The stock plunged roughly 24% on the day.
Almost immediately, CEO John Foley tried to do damage control... He blamed a "leaker" for the reports and called them "incomplete, out of context, and not reflective of Peloton's strategy."
But the thing is, the details don't really matter in this case... It's clear that investors have moved on from Peloton. The stock is already down more than 80% in roughly a year.
And as I'll explain today, the Power Gauge shows that the road to nowhere is just starting...
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Peloton always struck me as the poster child of our "stay at home" shift due to COVID-19. Because of that, it was the perfect bet in more ways than one...
Many of my friends, family members, and colleagues bought Peloton's exercise bikes and treadmills during the early stages of the pandemic. Heck, I almost did, too... But fortunately, I realized that the graveyard of stuff in my basement is already big enough.
Everyone was locked up at home... They were looking for ways to exercise and no longer needed to commute to work. Instead, they could use the extra time to get on a bike and join a group class with a fun vibe. It seemed like a great way to lose the "COVID 15."
So it makes sense that investors fell in love with Peloton's stock in the early days of the pandemic... From the March 2020 bottom through mid-January 2021, shares soared 750%.
But then, COVID-19 vaccines came out... They allowed folks to start returning to normal life. And it proved to be the beginning of the end for "stay at home" stocks like Peloton.
Peloton has been on a mostly one-way trip lower over the past year. It's down more than 80% in that span. You can see what I mean in the Power Gauge breakdown below...
Notice the abrupt drop last November... The stock tumbled from $86 to $55 per share after Peloton's latest earnings release – a 36% drop in one day.
That was a crushing blow. But as we've discussed, the slide has continued over the past couple of months... It's down another 46% since then.
The Power Gauge has been all over Peloton's sell-off... In fact, the system signaled a "bearish" alert for the first time all the way back in late March.
The "Relative Strength vs. the S&P 500" panel in the chart shows that the stock started underperforming the benchmark S&P 500 Index about a month before that. And the Power Gauge has held on to a "bearish" or "neutral" rating consistently over the past nine months. It's still "very bearish" on Peloton today.
But that wasn't all... The Power Gauge shifted from "bullish" to "neutral" even earlier – at the end of last January.
That change gave Peloton investors ample time to step aside before the big drop... It's the kind of warning that could've helped them lock in gains and look for the next opportunity.
Remember, making money in the markets isn't just about finding stocks that go up... It's just as important to avoid stocks that will crush your portfolio – like Peloton over the past year.
The simple fact is that this stock is down over 80% from its peak. It would take a massive move to get back to its old highs... And even worse, the bad news keeps coming.
That's a road to nowhere.
For investors like us, it's the kind of scenario we must avoid to find long-term success in the markets.
Good investing,
Carlton Neel
Editor's note: The Power Gauge pinpoints the best stocks to buy at any given time. And it also helps investors preserve their wealth by avoiding "road to nowhere" stocks like Peloton. Right now, you can find out how it all works directly from Chaikin Analytics founder Marc Chaikin. Plus, just for tuning in, you'll get a free recommendation. Get started right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.39%
4
19
7
S&P 500
+0.40%
61
340
96
Nasdaq
+0.46%
7
71
21
Small Caps
+2.39%
213
1126
522
Bonds
-0.82%
Consumer Discretionary
+1.20%
2
36
22
— According to the Chaikin Power Bar, Small Cap stocks are more Bearish than Large Cap stocks. Major indexes are mixed.
* * * *
Top Movers
Gainers
GPS
+7.94%
BBWI
+5.90%
GNRC
+5.54%
PAYC
+5.26%
CZR
+5.25%
Losers
SBNY
-3.73%
DISH
-2.93%
EA
-2.74%
NFLX
-2.60%
FCX
-2.51%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
ADM
PCAR
AXP, IVZ, JNJ, LMT, NEE, RTX
BXP, COF, FFIV, MMM, MSFT, TXN
VZ
GE
No earnings reporting today.
Earnings Surprises
BRO Brown & Brown, Inc.
Q4
$0.42
Beat by $0.03
HAL Halliburton Company
Q4
$0.36
Beat by $0.02
IBM International Business Machines Corporation
Q4
$3.35
Beat by $0.06
* * * *
Sector Tracker
Sector movement over the last 5 days
Staples
-1.71%
Utilities
-1.73%
Energy
-2.51%
Real Estate
-2.69%
Health Care
-3.70%
Industrials
-3.85%
Communication
-4.98%
Materials
-5.30%
Financial
-6.20%
Information Technology
-6.44%
Discretionary
-7.09%
* * * *
Industry Focus
Health Care Equipment Services
4
43
36
Over the past 6 months, the Health Care Equipment subsector (XHE) has underperformed the S&P 500 by -18.43%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #15 of 21 subsectors and has moved up 6 slots over the past week.
Indicative Stocks
TMDX
TransMedics Group, I
NVCR
NovoCure Limited
SILK
Silk Road Medical, I
* * * *
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