End of the Ride for Peloton
I'm exiting the name after a disastrous quarter, but I'm doing so my way.
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OK. It is now apparent that I have made a mistake with Peloton Interactive (PTON) .
Often, with our "Stocks Under $10" and Sarge-folio names, we have been fortunate enough to take profits at target prices and see those shares trade higher. Until recently.
A number of our names have been under intense pressure of late. I have been hurt in these names so far year to date (even if still up nicely longer-term) as these are my trades.
What I don't need is for the one or two lunatics that like to slide into my emails when a trade doesn't work and mention my family members, mention my life situations that they must have researched and mention how much they hate Donald Trump, though the president has no part in this. Those are some real anger management issues that I cannot fix for you. You need professional help and I hope you seek it.
For these individuals, if you think I am not a very good trader or investor despite the fact that I walked away from a base salary and from Wall Street in 2016 and have consistently outperformed the rest of Wall Street every year since, save one, don't follow me into my trades. To the rest of you, my loyal readers, I apologize for this rant, and I sincerely apologize for leading you into Peloton.
Earnings and Guidance
On Thursday morning, Peloton Interactive released the firm's fiscal second quarter financial results. In what has to be considered a disaster of a quarter, Peloton posted a GAAP EPS of -$0.09 on revenue of $656.5 million. The top-line print fell almost $20 million short of expectations, while the bottom-line missed Wall Street consensus by 3 cents per share.
The firm is projecting full year revenue of $2.4 billion to $2.44 billion, which was below, at the top end of that range, the $2.48 billion that Wall Street had priced in. The firm did increase its projection for full-year free cash flow to $275 million plus, from the guidance for $250 million plus that had been previously issued.
My Opinion
The time has come to get myself out of this name. As readers know, stocks that trade for less than $10 per share are exempt (always have been) from my 8% rule. Hence, with Thursday morning's nearly 23% beatdown, I am now down a grotesque 25% in this name. I have given them more than a few chances, and I have added to the position a couple of times.
Readers will see that in March 2025, PTON found support at the 78.6% Fibonacci retracement level of the stock's August 2024 through November 2024 rally. The shares are trying to make a stand at that spot on Thursday.
Now, I am going to leave the name. Understand what I mean by this: I am not going to go and sell the whole ball of wax at the lows on Thursday. In fact, I am likely to double the size of my long position perhaps as soon as Thursday in order to set up my exit. This may be a lengthy process. This may not be a lengthy process. That all depends on how long it takes me to make my money back through trading the stock on a daily basis.
Am I scared? No. I'm only scared of my God and something bad happening to people I love. This is money. I know how to fight this fight.
At the time of publication, Guilfoyle was long PTON equity.
