New Peloton Price Target After Pro Series Excitement Turns to Beating

I don't know how many readers noticed, but Peloton Interactive (PTON) , which we put a $9 target price on back on August 7, finally took out our target on Tuesday. 

I did not have the chance to write to you at the time as I was busy doing my day job. That said, hopefully at least some of you did notice and did give your long positions the obligatory haircut when a target is taken. Why do I say "hopefully"? Well, if readers haven't noticed, the stock is catching a beating on Wednesday morning. As I type, I see the stock won more than 6%.

The News?

Peloton had rallied for six consecutive sessions coming into Wednesday morning's opening bell. Two weeks ago, UBS analyst Arpine Kocharyan, who is rated at three stars by TipRanks, reiterated her "buy" rating and her $11 target price. Kocharyan saw "upside to 26E EBITDA driven by revenue growth and cost efficiencies" as well as "positive trends in key underlying metrics" and a "favorable risk/reward" proposition.

On Monday, Peloton announced the launch of a new Peloton Cross Training Series, featuring all new base and premium equipment designed for cross-training. This will include a new spin bike with a rotating screen with available accessories such as air fans, different seat types and smartphone holders. Integrating AI capabilities, "Peloton IQ" will provide for increased workout personalization, while trying to sell users upgrades and advanced functionality in regard to the equipment. These announcements had been expected, and anticipation had built up going into them.

This (Wednesday) morning, Peloton introduced the new Peloton Pro Series, which is a line of commercial quality fitness equipment meant for use in hotels, residential gyms, corporate wellness centers and country clubs. The lineup includes a new Tread+ Pro, which is the firm's first commercial grade treadmill as well as new versions of the Bike+ Pro and the Row+ Pro. Along with the new hardware, will come the launch of Peloton Spaces which is an intended immersive, co-branded workout environment that will work in partnership with commercial environments such as schools, hospitals and gyms. The stock rallied ahead of the open on Wednesday and then the profit takers showed up.

The Chart​

Readers will see that PTON has now developed a second rising-wedge ​pattern of bearish reversal since early April. Readers can also see what happened coming out of that first one. I don't think the wedge is about to close. Hence, my plan is to repurchase the shares sold on Tuesday on Wednesday's dip and return the position to full size.

That said, the new pivot is now the top to the wedge or the recent high, which is $9.20, which as long as the stock holds the underlying 50-day SMA, will now face is to increase our target price.

Target Price: $11 (up from $9)

Pivot: $9.20 (up from $7.44)

Add: Down to 50-day SMA

Panic: Loss of 200-day SMA

SoFi Technologies (SOFI)​

Readers need to be cognizant that SoFi Technologies (SOFI)  has been under some pressure and is in danger of losing contact with the $27 pivot that was created by the ascending triangle seen above. Should this line truly break, there is a better than decent chance that the stock will go on to form something that may end up looking like a head-and-shoulders pattern of bearish reversal.

Now, I am a believer in SOFI, but if that pivot cracks and contact is lost, I will be ready to take off a good 20% of the position so that I can add it back on at lower prices as that head and shoulders develops. Even if one does not make that preemptive sale, I would see that development as an opportunity to add. My target price remains $33.

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