I'm Buying More of This Low-Priced Stock Ahead of the Numbers

One "Stocks Under $10" name that I have not discussed for a few weeks is Peloton Interactive  (PTON) . Peloton also happens to be one of our few names that has not performed as we might have hoped.

The stock got hot in the teeth on Friday and will likely suffer a similar fate Tuesday as the broader marketplace prepares for a Greenland-inspired beating. 

There has not been a lot of news in Peloton. I haven't seen anything other than occasional attempts by options traders to manipulate the market for about a month. 

That said, back in late December, I pointed out to readers that the stock had developed a falling wedge pattern of bullish reversal and could soon thereafter enjoy an increase in price. PTON did break out of that pattern, but that breakout is now failing.

Earnings

Peloton is expected to report its fiscal second quarter financial results on Feb. 5, so we are closing in on the "two-weeks to go" mark. Wall Street is expecting the company to post a GAAP loss per share of $0.06 on revenue of just a smidgen more than $675 million. Though not profitable, this would compare quite well to the year-ago print for the same quarter of -$0.24, while producing annual sales growth of less than 0.2%.

Sales growth like that, while it might seem miniscule, would be only the second quarter of positive growth in that metric since the second quarter of fiscal 2022. 

Of the 13 sell-side analysts that I can find that cover the stock, six have revised their earnings estimates for this quarter lower, while only one has revised those numbers higher. Not sure if it's a net positive or not, but that means that six analysts left their digits where they were.

The Chart​

PTON delivered a breakout that from bottom to top, ran ​17.8%. Unfortunately, that rally petered out at $7.02 early last week, which also happened to be the stock's 200-day simple moving average (SMA). That was a clear sign that professional money is not yet ready to hop on board with this idea. The stock has since lost its 50-day SMA and 21-day exponential moving average (EMA).

Additionally, in above the chart, Relative Strength is now below "neutral" as the daily moving average convergence divergence (MACD) (below the chart) is showing signs of weakening as well. That said, neither of those indicators is flat out bearish either. 

My plan now shifts to adding down to the very early January low, or on momentum on a retaking of the 50-day SMA on the way to a second attempt at the 200-day SMA. I'm thinking Tuesday is an excellent day to add. Regardless, I will ride my spin bike in my garage at some point today.

Price Target: $8.50 (down from $9.00)

Pivot: 200-day SMA (currently $7.00)

Add: Definitely Today. 

Panic: Loss of the recent low ($5.96)

At the time of publication, Guilfoyle was long PTON equity.