theStreetFika: Scones, Sips, Strategy & Stocks

Today, Peloton announced that it's recalling all treadmills and its CEO John Foley finally apologized for not cooperating with the U.S. Consumer Product Safety Commission (CPSC) sooner. Honestly, as an investor, I'm shocked the CEO has not resigned yet because his handling of this crisis has been a disaster. Peloton was the epitome of a Coroneconomy thriver. Its stock ~5X'd in 2020, as its connected home fitness products flew off shelves. It has been trying to expand beyond its spin bikes — so it launched treadmills. Those are causing major problems. In March, Peloton's CEO disclosed that a child had died in an accident involving a Tread+. The CPSC said people should stop using Peloton's Tread+ if small children or pets are at home. The CPSC cited 39 incidents involving a Tread+, including instances of children and pets getting sucked underneath it. So instead of following rule #1 of crisis management, i.e overcorrect, Peloton got defensive - the company called the ...

Although Peloton's stock debuted in late September 2019, it didn't soar until the pandemic hit. Before the pandemic, the company was growing well, but it was spending a lot of money to grow and investors were skeptical if there was enough market for its products. Then the pandemic hit, fitness enthusiasts turned to Peloton to provide them with workout options while gyms were closed, sales skyrocketed, and Peloton's stock become one of the biggest pandemic success stories. Since January, the stock has lost close to 40% of its peak value. This is primarily because of concerns that the company could return to its net-loss financials as the pandemic wanes. After all, until the pandemic, Peloton was not very profitable. As vaccines started getting rolled out many investors started to wonder if Peloton can sustain the growth it saw in 2020. I think it can. As mentioned in a previous article , I think Peloton will outlive the pandemic and continue to post strong numbers. Its moat ...

One of the primary reasons I held on to my Tesla stocks during the “darkest days” of the Model 3 rollout was because I was certain either Apple or Google would acquire it. This is why I was very surprised when Elon Musk tweeted today that he wanted to sell Tesla to Apple but that CEO Tim Cook refused to take the meeting. Tesla isn’t the latest Apple acquisition bet that I got wrong though. That’d be Peloton. IMO, Peloton’s rally will outlive COVID. It's on track to ~$2B in revenue at the end of this year- that’s a year-over-year (YOY) growth of 100% - and yes the pandemic has helped a lot but the company projects to hit ~ $4B by the end of 2021. Since it IPO-ed, Peloton has had all the makings of an exceptional business that would be a great candidate for Apple to acquire. I was dead certain that it would be a matter of time before that happened, especially as Tim Cook pushed to quadruple revenues from Apple Services and turn it into a $50B per year business. Peloton ticks many of...