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Peloton Interactive (Nasdaq: PTON) dated 22 Jun 2021

Updated: Aug 1, 2021

Peloton is a hardware technology company that manufactures and distributes fitness devices, namely its Peloton Bike and Tread. Apart from selling hardware, Peloton makes money by charging users a monthly subscription fee to access workout content as well. Sales were already growing over 100% per year for six years, pre-CoVid.

One of the argument against Peloton was that it was a pure CoVid play that benefited last year as people were working from home. As the economy recovers from the pandemic, people will be going back to physical gym and Peloton’s growth rate will decline from stratosphere. That may be true for a while as Peloton reported that average monthly workouts did drop initially from a peak of 24.7 in Q4 2020.

However, latest Q1 2021 reported that this number rebounded and even broke new high to hit 26 workouts/month. Huge growth, customer stickiness & a new consumer paradigm to 'live togther with' the CoVid virus, Peloton may be that beaten down growth stock to consider.

Peloton Daily chart dropped below 250 days Moving Average briefly before crossing back up and was hovering in a range of $100-$115 the past one month. There are roughly 250 trading days in a year, excluding weekends and public holidays, thus 250 days MA can be used as a mid-term support/resistance line and to gauge the market trend as well.

Price trend had diverged from KST indicator, signalling possible reversal of short-term trend from down to up. Furthermore, during the last wave up from the low of $80 in early May, we witnessed a pick up in volume, a positive sign of renewed interest from buyers.

Traders/investors believing in the growth prospect of the company, can look out for the breakout above resistance of $115 as a signal to buy-in on a momentum play in the stock price. Next 3 resistance levels are at $125, $140 and $170. Next significant support at $80.

As usual, this writeup was broadcast to Clients on 22 Jun 2021 but posted here only on 28 Jun 2021.

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