Boom Bust investigates how one ad could wipe out $1 billion of Peloton stock
The online advert featured a grateful owner of a Peloton bike making a video for her husband which shows how her health and fitness has changed over the course of one year, and saying: “A year ago, I didn’t realise how much this would change me.”
The ad labeled by some as sexist could be a catalyst for the correction of Peloton stock price after the connected-fitness company held its IPO in September, host Christy Ai noted. However, the company has “momentum stock,” which means that it’s driven by market sentiment, which currently does not benefit the firm.
As Peloton may not reach profitability until 2023 and possibly beyond and the company sacrifices profitability for growth, it raises questions about its future, she noted.
However, Adam Mesh of the Adam Mesh Trading Group says that the “temporary bad news” could mean long-term good ones for the firm. He noted that many companies, like JP Morgan, Facebook or Netflix, went through hard times, but proved to be successful.
“The lifetime value of their customers is probably a lot more than they’re spending right now, and they are talking even more market share,” the analyst said. “Don’t underestimate the power of the content they’ve built up and they continue to build up.”
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