Is this week’s 15% sell-off in the US shares of exercise equipment maker Peloton Interactive (NASDAQ:PTON), in response to a recall of its treadmills, overdone? Or is this just an inevitable reality check for a grossly overvalued stock – pumped up by home exercising during Covid-19, and the Federal Reserve’s monetary expansion?
The chart context is a wider fall of around 50% to $83.8 currently, from last January’s high of $171. Yet Peloton stock only took off with the pandemic. Prior to end-March 2020 it had traded sideways in a circa $20 to $30 range after floating in September 2019 at $29, which capitalised the business at around $8 billion (£6.5 billion).
Mixed third-quarter results
Late yesterday, Peloton declared sales growth of 141%, ahead of consensus by 13% and maintaining a trend of beats over the last four quarters. Latest progress significantly follows from investments in the supply chain to improve deliveries. Peloton has become a victim of demand success for its equipment during the pandemic, incurring bottlenecks.
Though the stock continued to fall…
