Pro: buying Peloton stock is ‘absolute nonsense’

By:
on Dec 23, 2022
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  • Embark Group's Peter Toogood is super bearish on Peloton Interactive.
  • BMO's Simeon Siegel also reiterated his sell rating on PTON this week.
  • Peloton stock is currently down over 75% versus its year-to-date high.

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Peloton Interactive Inc (NASDAQ: PTON) is down another 5.0% on Friday after Peter Toogood – the Chief Investment Officer of Embark Group said buying shares of this connected fitness company was “absolute nonsense”.

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Peloton stock could crash further in a recession

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He has a similar stance on “profitless tech companies” at large that he warns are unlikely to recover even if the Fed pivots. Why? Because that would signal an economic downturn, which, in itself, spells further turmoil for the likes of Peloton.

Buying Peloton – what? What nonsense. Profitless growth has gone – yey, let’s be happy.

The U.S. Federal Reserve is now expecting only a 0.5% annualised growth in GDP next year. Such an environment traditionally favours companies with strong, reliable profits.

Versus its year-to-date high, Peloton stock is now down more than 75%.

BMO analyst reiterates ‘sell’ rating on PTON

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In November, Peloton reported another disappointing quarter and issued bleak guidance for the future – making Simeon Siegel reiterate his “sell” rating on the tech stock.

In a recent interview with Yahoo Finance Live, the Senior Retail Analyst of BMO Capital Markets said:

The question we have to ask when thinking about companies that took these [pandemic] results and assumed they’d last forever is, did they over inventory, or over infrastructure? Unfortunately, Peloton did both.

His price objective of $8.0 suggests the Peloton stock still has another 10% downside from here. For its current quarter, the Nasdaq-listed manufacturer of exercise equipment expects to report $110 million to $115 million of EBITDA loss (find out more).

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