Is Peloton Stock A Good Buy?

Should Investors Hold On To Peloton Or Sell?

Ever since its disappointing Q2 earnings last week, Peloton’s share price has plummeted, but is it too soon for investors to give up?

Much has been said already about the ‘disastrous’ Q2 figures given by Peloton (NASDAQ: PTON) at last week’s earnings call.

However, does that mean it’s time to give up, or is it actually a valuable investing lesson? 

Cycling to something special (stationarily)

Every investor has been there before:

  • Stock goes up — “woohoo!”
  • Stock keeps going — “we’re heading to the moon!”
  • “Stocks never go down!”
  • Mediocre earnings report happens — “I’m never going to financially recover from this…” 

It happens, but that last point is far from the truth. Peloton is going through a rough patch right now — down 10.4% since Tuesday — as revenue growth fell from 141% year-over-year in Q1 to a ‘measly’ 54% in Q2 following gym reopenings and vacationing. The company also swung to a loss following significant investments and expensive product recalls.  

Investors have since panicked, but there’s no need. 

Many stay-at-home winners have experienced similar disappointments in 2021. Dips like this are just something that happens when investors get spooked. Don’t ignore the fact that, since going public in September 2019, Peloton’s share price has soared more than 300%.

Peloton continues to innovate and still sees an opportunity to reach roughly 15 million households globally. It is also working on new pricing strategies that have made it more competitive and has yet to expand internationally. 

Investing is a long-term game, and this should not be forgotten when that ‘sell’ trigger finger begins to itch. After all, for a ten-year investment, one business quarter is just 2.5% of that entire time. 

Be patient.

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