Peloton might be having a difficult time retaining and attracting talent

For those who are following my personal Twitter account, I famously told people that this is one stock that will benefit the most during Covid and myself as well as some of my followers got 4-5x return and some even more trading options.

And those who sold but continued to follow realized that so many bikes were on sale and decided to take a short position with me and made a significant amount of money.

This time, I am going to make another bold bet and here is a reason why.

Peloton ($PTON) is barely surviving.  The stock is now down to about $10 from the ATH of $162.  Yes, lost more than 93% of its value in 18 months.  And many people have been asking me,

• “is this the right time to buy?”
• “can this go any lower?”
• “is the fad over?”
• “can they make a comeback?”

I will have to dissect in few ways and let’s start with this.

Do they have the right talent to continue to

• thrive when people want to be outside
• deliver growth
• differentiate themselves from their competitors

And here my answers.  When it comes to getting the right talent, I think they are struggling.  They got a new CEO, slashed 2,800 jobs, a major cost cutting of over $800 millions (yeah, kiss all those nice perks goodbye).  They are hiring though.  At the time of writing this, they had 361 job openings.  However, some of these jobs, they have been open for awhile.  Some, at least 6 months since I have been tracking them.  This is a sign that people don’t want to work for them.  And get some lousy stock options that might be worthless.

Are they losing customers?

I think they are.  I started to interview their customers and some that are getting free apps through UnitedHealth.  They are not actively using their bikes.  And if you see the photo below, people are selling their bikes.  Not one or two,  many.  The whole set including shoes and all the accessories (not a behavior of upgrading to a new bike but leaving them for good).  And when you go to their stores, they are not as busy.  So yes, the demand is no longer there.

Is it still cool to exercise on Peloton?

Just take a look at what people are saying here.  And a very creative and visual presentation from WSJ here as well.  And more of the customers I have interviewed said they will rather travel and go hiking outside.  Yes, no wonder why traveling is booming now.

Conclusion: Difficult time retaining and attracting talent.  Losing customers.  No longer a fad.  I think that’s a trifecta for a disaster.  My prediction, $PTON heads below $3 in the near future and will fold unless they figure out a way to transform their business.  On that note, we have take a long-short position.

Again, do your own DD before making any investment decisions.