S&P 500 (SPY) Tests Resistance At The 20 EMA

Key Insights

  • S&P 500 is moving higher today while traders are waiting for comments from Jackson Hole. 
  • Chinese stocks enjoyed strong support today as China is reportedly close to an audit deal with the U.S. 
  • S&P 500 needs to settle above the 20 EMA to continue its rebound. 

S&P 500 Gains Some Ground As Jackson Hole Symposium Begins

S&P 500 is moving higher today as traders continue to buy stocks after the recent pullback. The index managed to settle above 4150 and made an attempt to move above 4185.

The better-than-expected GDP Growth Rate report, which indicated that GDP declined by 0.6% in the second quarter, provided some support to stocks today.

Treasury yields are moving lower, which is bullish for riskier assets. Treasury yields will be extremely sensitive to Powell’s comments on Friday, but it remains to be seen whether bond traders are ready for big moves ahead of his speech.

In case traders do not hear anything disturbing from Jackson Hole today, S&P 500 will gave a great chance to finish the day in the positive territory.

S&P 500

Currently, S&P 500 is trying to settle above the 20 EMA. A successful test of this level will provide S&P 500 with an opportunity to develop sustainable upside momentum. If S&P 500 closes below the 20 EMA today, traders should be prepared for some downside pressure at the start of tomorrow’s trading session.

Chinese Stocks Rally As U.S. And China Are Reportedly Close To An Audit Deal

Chinese stocks are among the best performers today after the release of a report on a successful audit deal between the U.S. and China. Chinese stocks were at risk of delisting if Chinese companies failed to comply with the U.S. audit standards.

Alibaba, JD.com, Pinduoduo, Baidu, NIO and other Chinese stocks enjoyed strong support today as traders reduced the delisting risk discount.

While the rally in Chinese stocks is strong, the most notable gainer is the cloud-based data platform company Snowflake, which is up by about 20% after the strong quarterly report. The report highlighted strong revenue growth and provided material support to Snowflake shares, which have been under pressure this year as traders moved away from richly-valued tech stocks.

Peloton stock, which is down by more than 17% today, is the main disappointment of the day. Yesterday, Peloton rallied after the company announced that it would launch products, apparel and accessories in Amazon’s U.S. stores. Today, Peloton released its quarterly report, which indicated that demand for the company’s products remained weak.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 (SPY) Rebounds Towards The 4,150 Level

Key Insights

  • Stock traders enjoyed a technical rebound today. 
  • It was a rather slow day as traders were waiting for the Jackson Hole Symposium, which starts tomorrow. 
  • Peloton stock jumped after the company launched products in Amazon’s U.S. stores. 

S&P 500 Moves Higher Ahead Of The Jackson Hole Symposium

S&P 500 gained some ground and moved towards the 4,150 level as traders scooped up shares after the recent strong sell-off. The rebound was broad, and most market segments moved higher today.

The breadth of the upside move highlights the technical nature of this rebound. There were no specific catalysts for the move.

The rebound was not strong as traders were not ready to make big moves ahead of the Jackson Hole Symposium, which starts tomorrow.

The news from Jackson Hole will have a significant impact on markets, so traders should be prepared for volatility in the remaining trading sessions of the week.

S&P 500

From a technical point of view, S&P 500 has once again failed to settle above the 20 EMA, which remains a significant resistance level. S&P 500 must get above this level to have a chance to gain sustainable upside momentum.

On the support side, the 50 EMA at 4080 should serve as the main support level for S&P 500. A move below this level will signal that S&P 500 may be ready to start a new downside trend.

Energy Stocks Stay Strong As WTI Oil Moves To New Highs

WTI oil rebounded from session lows and gained upside momentum, which was bullish for leading energy stocks like Exxon Mobil and Chevron.

Peloton stock gained 20% today after the company announced that it would launch products, apparel and accessories in Amazon’s U.S. stores. Peloton is scheduled to report earnings on August 25, before market open, so the stock will remain volatile tomorrow.

Bed Bath & Beyond stock was up by 18% as a WSJ report indicated that it had secured a loan deal. There are many traders who are underwater in this stock after its fast rally to the $30 level and the subsequent pullback towards the $8.50 level, so such traders may use the rebound to get out of their positions. Thus, it remains to be seen whether Bed Bath & Beyond will be able to gain additional upside momentum in the upcoming trading sessions.

Among losers, Nordstrom stock was down by 20% after the company released a disappointing quarterly report and lowered its guidance.

Generally, it was a rather slow day. The market behaviour will likely change tomorrow, when traders will react to the first news from Jackson Hole.

For a look at all of today’s economic events, check out our economic calendar.

Peloton Is Down By 15%, Here Is Why

Key Insights

  • Peloton’s quarterly report serves as an additional bearish catalyst for the company’s stock as guidance disappoints. 
  • Subscription growth is slowing down, while revenue from hardware sales is falling due to lower prices. 
  • There are no signs of a turnaround, so the stock is under strong pressure. 

Peloton Stock Falls After Quarterly Results

Shares of Peloton gained strong downside momentum after the company released its quarterly results. The company reported total revenue of $964.3 million and GAAP loss of $2.27 per share. Connected Fitness Products revenue was $594.4 million, while subscription revenue totaled $369.9 million.

Traders focused on the company’s outlook for the next fiscal quarter. Peloton expects that Connected Fitness Subscriptions will increase from 2.96 million to 2.98 million.

Total revenue is expected to decline from $964 million to $675 million – $700 million. The company commented: “Our Q4 outlook reflects softer demand vs. our February forecast, partially offset by accelerated sales we’ve seen as a result of our recent hardware price reductions”.

Not surprisingly, the market did not like the company’s guidance, and the stock made an attempt to settle below $11.50.

What’s Next For Peloton Stock?

A recent Wall Street Journal report indicated that Peloton was searching for investors that could be willing to buy a 15% – 20% stake in the company. The quarterly report shows why Peloton wants to raise more cash.

The company’s business is struggling, and its fiscal fourth quarter revenue is expected to fall by 27% on a year-over-year basis. Analysts do not expect that Peloton will be able to become profitable anytime soon, so the company’s management needs to come up with a credible turnaround plan.

At this point, the market does not believe that such a plan exists. Subscriptions growth has stalled, while hardware sales revenue is under pressure as the company has to offer lower prices to attract new consumers. Peloton will need to come up with strong positive catalysts to break the current downside trend.

For a look at all of today’s economic events, check out our economic calendar.

Peloton Is Down By 10%, Here Is Why

Key Insights

  • Peloton is reportedly searching for an investor that could buy a minority stake in the company. 
  • If confirmed, the report signals that the company is facing material problems. 
  • The current market environment is bearish for Peloton as investors rush out of unprofitable companies. 

Peloton Stock Declines After Report Indicates That It Is Searching For A Minority Investment

Shares of Peloton found themselves under pressure after a Wall Street Journal report indicated that the company was searching for investors who were willing to pay for 15% – 20% stake in the business.

Back in February, traders speculated that Amazon, Nike or Apple could buy the company. However, the potential deal never materialized, and Peloton stock has moved to yearly lows.

The WSJ report served as a negative catalyst for Peloton stock as it indicated that the company failed to sell itself and was trying to raise more cash to support the turnaround of its business. The company’s desire to sell a stake is certainly viewed as a sign of financial weakness.

What’s Next For Peloton Stock?

Currently, analysts expect that Peloton will report a loss of $3.92 per share in the current year and a loss of $1.1 per share in the next year, so the company is not expected to be profitable in the near term.

The market is worried that Peloton has already seen peak demand for its products, and that consumers’ preferences have already shifted after the end of the acute phase of the pandemic.

In additon, inflation and supply chain problems may put more pressure on the company’s bottom line. More, the rising interest rate environment is bearish for unprofitable companies like Peloton. In this light, it remains to be seen whether speculative traders will be ready to buy the stock after the current pullback.

For a look at all of today’s economic events, check out our economic calendar.

Netflix Is Down By 39%, Here Is Why

Key Insights

  • Netflix stock dives after the company reports that net subscribers decreased by 200,000 in Q1 2022. 
  • The company’s subscriber forecast for Q2 2022 shocks the market. 
  • Netflix’ growth story is busted, and the company needs to come up with positive catalysts to break the current downside trend. 

Netflix Stock Collapses As The Company Predicts A Loss Of 2 Million Subscribers In Q2 2022

Shares of Netflix found themselves under strong pressure after the company released its first-quarter report. Netflix reported revenue of $7.87 billion and earnings of $3.53 per share, beating analyst estimates on earnings and missing them on revenue.

The market focused on the company’s subscriber data as Netflix said that it lost 200,000 subscribers in Q1 2022. More, the company believes that net subscribers will decrease by as much as 2 million in the second quarter of 2022.

The market is clearly shocked by this news, and Netflix stock is down by 39% during the current trading session. Other stocks in this market segment, like Disney  and Paramount, are also moving lower.

What’s Next For Netflix Stock?

Netflix has been a classic growth stock for years, so investors were focused on the company’s subscriber numbers and potential revenue opportunities rather than the company’s valuation.

Currently, analysts expect that Netflix will report earnings of $10.96 per share in 2022 and earnings of $14.17 per share in 2023, so the stock is trading at 15 forward P/E.

Such valuation levels look cheap for one of the leading tech stocks, but earnings estimates have been moving lower in recent months and they will decline after the earnings report.

Recent market action shows that tech stocks get severely punished if the market has doubts about their ability to grow. Examples include Roku (from $490 to $98), Zoom (from $588 to $95), Peloton  (from $171 to $20).

In this light, it remains to be seen whether speculative traders will rush to buy Netflix shares after the huge pullback which took the stock from the $700 level to the $215 level.

Netflix promised to monetize shared passwords and explore a move into advertising, but the company will have to come up with tangible evidence of the success of such initiatives before the market is ready to view it as a growth stock again.

For a look at all of today’s economic events, check out our economic calendar.

Why Peloton Stock Is Down By 4% Today

Key Insights

  • Peloton reveals Peloton Guide pricing, which is lower by 40% compared to previous expectations. 
  • Takeover rumors have not materialized, which hurt Peloton stock.
  • Lower pricing suggests that demand for Peloton products is weaker than expected.

Peloton Stock Declines As Peloton Guide Pricing Disappoints

Shares of Peloton gained downside momentum after the company announced that its strength training product Peloton Guide would be sold at a starting price of $295.

Previously, the company planned to sell Peloton Guide at a starting price of $495, so the new price is lower by about 40%.

Not surprisingly, Peloton stock found itself under material pressure after the news was released. However, the losses are limited as the market remains focused on the company’s M&A potential, which has pushed the stock away from lows back in February.

What’s Next For Peloton Stock?

Analysts expect that Peloton will report a loss of $3.93 per share in the current year and a loss of $1.05 per share in the next year, so the company is not expected to return to profitability in the near term. In addition, analyst estimates have been moving lower in recent months, which was bearish for the stock.

Takeover rumors were the only catalyst behind Peloton’s rally in February. However, real bidders have not materialized, and the market begins to question whether a buyer could emerge anytime soon.

The recent news on Peloton Guide pricing could serve as a longer-term negative catalyst for Peloton stock as it shows that demand for the company’s products is not as strong as expected.

The pandemic is over in the minds of many potential customers, and it remains to be seen whether Peloton will be able to find sources of real growth in the post-pandemic world.

At this point, potential takeover rumors are the catalyst which could keep the stock afloat, but it is not clear if this catalyst will be sufficient enought to push Peloton stock higher in case any potential buyer does not show up in the next few months.

For a look at all of today’s economic events, check out our economic calendar.

Why Peloton Stock Is Up By 20% Today

Peloton Stock Rallies On Takeover Reports

Shares of Peloton  rallied after a WSJ report indicated that Amazon was thinking about buying the company, while a FT report highlighted Nike as another potential bidder. Apple has also been mentioned by analysts as a potential suitor.

Peloton stock is down by more than 80% from its highs that were reached back in 2022, and a potential deal looks like a way out of the current situation.

The market doubts whether the company will be able to grow at a healthy pace after its initial success. The potential acquisition makes strategic sense for Peloton as support from one of the world’s leading companies can boost its business.

What’s Next For Peloton Stock?

Analysts expect that Petloton will report a loss of $2.91 per share in the current fiscal year and a loss of $1.03 per share in the next fiscal year, but traders will likely ignore financial forecasts in the upcoming trading sessions and focus on the potential competition between suitors.

Adding to volatility, Peloton is set to release its second quarter fiscal 2022 results on February 8, after the market close. In case the company fails to reach a deal before the release of the earnings report, it will not provide commentary on the recent rumors.

The key question for traders is whether potential suitors are ready to pay a material premium for Peloton stock. Sometimes, this premium is not that big, as higlighted by today’s deal between Frontier and Spirit Airlines (SPR is up by just 14% in today’s trading session).

In case the big companies are highly interested in buying Peloton, the company’s stock may move higher as competition between bidders intensifies and more rumors emerge. However, traders should be careful as no deal is guaranteed, and suitors may have the intention to grab Peloton on the cheap due to the company’s recent problems.

For a look at all of today’s economic events, check out our economic calendar.

Tough Going for Peloton

Peloton wasn’t alone. A whole class of ‘pandemic darlings’ were being put through their paces, as life looks set for a return to normality. Netflix, Zoom, DocuSign, Etsy were all down in what was described as a stock market meltdown, as some 42% of stocks on the Nasdaq exchange saw their 52-week highs cut by half. The Nasdaq 100 Stock Index has lost 10% this month, recalling memories of 2020 and 2008.

So, is this just about the market or does Peloton have its own particular problems? Launched 10 years ago, it had a stellar 2020, when demand for its exercise bikes surged when gyms closed. Last year, with a gradual return to a semblance of normality, the correction was perhaps bound to come, though few expected a 76% loss. Average monthly workouts per connected subscription have been slowing recently, since hitting a peak in 3Q 2021, though the membership of more than 2.5 million remains impressive.

Problems continue to plague Peloton

Problems have continued to plague Peloton. This week, founder and CEO John Foley said the company was “resetting” production levels and cutting operational costs, possibly including headcount, triggering a hard sell-off that cut almost $2.5bn from Peloton’s market value. Compounding Peloton’s woes were media reports that the company was temporarily halting production, though these were denied. And, in apparent confirmation of Peloton’s problems, came news of the appointment of management consultant McKinsey & Co.

Is Peloton downsizing? What are the problems? Analysts have pointed to Peloton’s investment strategy, set in response to the surge in demand in 2020, when Peloton struggled to meet demand. Since then, the strategy has been to boost capacity, making significant investments in factories in Taiwan, North Carolina and Ohio. With this expansion also came increased staff costs, on top of an already healthy marketing spend, all candidates for McKinsey cutbacks. It seems Foley has over-extended, and activist investors have already called for his resignation.

Multi-year returns substantial

We should not lose sight of the positives. Firstly, the multi-year returns are still substantial. Peloton will be reporting its earnings on 8 February, but the news is expected to be good. Connected fitness subscriptions remain solid, though slightly down at 2.8 million; revenue is expected to hit its previous forecast of $1.1–1.2bn; while its previously forecast EBITDA loss of $325–350m is expected instead to be only some $270m.

Peloton is recognised as the sector’s market leader with a fitness product that is well ahead of the competition. However, its high cost (the base price of the Peloton Bike is $1,495, while membership is around $40/month) combined with the macro picture of slowing demand amid a general return to gyms, means 2022 is going to be challenging.

Peloton has been through a punishing year but we can expect it to come through leaner and fitter, and with a broader product range, such as possibly a rowing machine. Bearing in mind that connected fitness as a sector is in its infancy, this stock may may well be a candidate for a strong recovery, though speed of recovery is another matter.

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Why Peloton Stock Is Down By 3% Today

Peloton Stock Declines After Analyst Downgrade

Shares of Peloton found themselves under pressure in the last trading session of the year after the stock was downgraded by JPM Securities.

The decline in website trafic in December (on a year-over-year basis) was named as the main reason for the downgrade. Judging by the decrease in online traffic, demand for Peloton’s products was weak in the key season.

It should be noted that Peloton stock is down by more than 75% year-to-date. Investors rushed out of Peloton shares as interest in stay-at-home stocks declines and the company faced problems with its treadmill.

What’s Next For Peloton Stock?

The market has doubts about the company’s ability to grow after its initial success. Interestingly, even the recent surge in the number of new coronavirus cases failed to provide any support to Peloton stock.

Analyst estimates kept moving lower in recent months. Currently, analysts expect that Peloton will report a loss of $2.87 per share in fiscal 2022 and a loss of $0.84 per share in fiscal 2023.

The company is not profitable, so it should show strong growth. If Peloton’s growth slows down, the stock will find itself under pressure. If Peloton fails to show any growth at all, its shares will be in deep trouble.

It should be noted that tax-loss selling has likely contibuted to the weakness of Peloton stock. Some traders like to enter long positions in beaten stocks at the very beginning of the next year when tax-loss selling factor disappears and funds establish new positions, so it would not be surprising to see increased activity in Peloton stock next week.

In the longer-term, the company must prove that there is sustainable demand for its products. If the next earnings report shows that sales were weak, the stock will find itself under significant pressure.

For a look at all of today’s economic events, check out our economic calendar.

Best Stocks, Crypto, and ETFs to Watch -ETH, FDX, FXI and ATVI in Focus

Ethereum (ETH) has outperformed Bitcoin (BTC) by a country mile in the last seven weeks, holding much closer to November rally highs. It’s pulled back just 19% since that time while the crypto king has relinquished nearly 29%. In addition, the decline has found support near the .382 Fibonacci retracement of the rally starting in September while BTC is struggling to hold the .786 retracement. And, unlike its rival, ETH hasn’t failed the breakout above the May high.

We’re headed into December triple witching options expiration, marking the last chance for fund managers to lock in 2021 gains (or losses) before heading out for the holidays. Expect volatility and two-sided action to surge, with growth, inflation, and Omicron competing for traders’ attention. The week could mark a good opportunity to think contrary and look for Peloton Interactive Inc. (PTON) to burn short sellers riding down a 61% six-week slide to a 19-month low.

Fedex Corp. (FDX) rallied above 2018 resistance in the 270s in November 2020 and failed the breakout 10 months later, entering a decline that tested the 200-day moving average successfully in September. It’s now bounced back to resistance at the 50-day moving average, just in time for Thursday’s after-hours report, when the shipping giant is expected to post a profit of $4.82 per-share on $22.4 billion in revenue. Look for the stock to make little progress after the news, with supply disruptions, inflation, and Omicron weighing on the holiday sales outlook.

iShares China Large Cap ETF (FXI) sold off to the .786 Fibonacci retracement level of the 2020 rally in July 2021 and has spent the last six months testing this support level, which has narrowly aligned with the 200-month moving average. This confluence predicts that bulls will ultimately prevail, ahead of a substantial rally wave that persists well into 2022. Relative strength indicators are flashing the same message, deeply oversold and trying to cross into buy signals.

Activision Blizzard Inc. (ATVI) has been crushed in 2021, dropping 37% in reaction to a poorly-handled sexual harassment scandal. CEO Bobbie Kotick faces widespread calls to resign but he continues to act like a Marvel villain, refusing to step down. Coca-Cola Co. (KO) could strip him of his Board membership soon while outraged employees are trying to unionize. All in all, this is perfect set-up for a profitable short squeeze when the CEO finally cleans out his desk.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held Coca-Cola in a family account at the time of publication.

Why DocuSign Stock Is Down By 40% Today

DocuSign Stock Plunges As Company’s Growth Slows Down

Shares of DocuSign found themselves under huge pressure after the company released its quarterly report. DocuSign reported revenue of $545 million and adjusted earnings of $0.58 per share, beating analyst estimates on both earnings and revenue.

However, its fourth-quarter revenue forecast disappointed. The company expects to report revenue of $557 million – $563 million, which means that growth is slowing down.

The company’s CEO Dan Springer stated: “After six quarters of accelerated growth, we saw customers return to more normalized buying patterns, resulting in 28% year-over-year billings growth”.

These are not the words that investors would like to hear from a high-growth company. Not surprisingly, analysts rushed to cut their price targets for DocuSign stock, putting additional pressure on the company’s shares.

What’s Next For DocuSign Stock?

Currently, analysts expect that DocuSign will report earnings of $1.7 per share this year and $2.19 per share in the next year, so the stock is trading at 64 forward P/E despite the massive sell-off.

The company’s rich valuation is the main reason for the current weakness of its stock. At such valuation levels, traders expect fast growth. When growth begins to slow down, the stock is punished. Similar pandemic-era examples include Zoom, which is down by about 70% from highs that were reached back in October 2020, and Peloton, which is down by more than 70% year-to-date.

Investors and traders have already seen what happens to high-flying stocks when companies’ growth slows down, so they rush to exits at first signs of weaker growth. In DocuSign’s case, potential for multiple compression remains significant even after the strong sell-off.

In this light, it remains to be seen whether speculative traders will rush to buy DocuSign shares. Examples like Zoom and Peloton show that it is difficult to find a bottom in such situations, so traders may stay away from DocuSign stock in the upcoming trading sessions.

For a look at all of today’s economic events, check out our economic calendar.

Best Stocks, Crypto, and ETFs to Watch – Visa, Shiba Inu and SPDR S&P Retail ETF (XRT) in Focus

Fears of a March 2020 reprise will impact market sentiment and price action in the new trading week, as evidenced by big moves in COVID beneficiaries and casualties during Friday’s holiday-shortened U.S. session. A contrary strategy makes more sense at this point than chasing the fearful crowd, looking for fresh sell signals on pandemic cast-offs that include Peloton Inc. (PTON) and Zoom Video Communications Inc. (ZM) while waiting for tradable lows in travel and digital transaction plays, like United Airlines Holdings Inc. (UAL) and Visa Inc. (V).

Dow component Salesforce Inc. (CRM) is the third strongest performer in the venerable index, gaining nearly 28% year-to-date. The stock broke out earlier this month above the rally peak posted after the company joined the index in August 2020 and pulled back to test new support during Friday’s rout. Tuesday’s post-market earning report should decide whether or not the breakout is sustainable, with the company expected to post a profit of $0.92 per-share on $6.80 billion in revenue.

Crypto assets are under pressure along with growth stocks after the Omicron news, illustrated by Bitcoin 10%+ decline to a 7-week low on Friday. However, lowly Shiba Inu held above Wednesday’s low during that session and has continued to trade above short-term support near $0.00003800 over the weekend. This bullish divergence could come into play because that price level also marks support at the .618 Fibonacci retracement of the powerful uptrend between October 2020 and October 2021.

Brick and mortar retailers got sold aggressively ahead of Black Friday, with popular chains that include Nordstrom Inc. (JWN) and Gap Inc. (GPS) reporting weak margins and issuing cautious outlooks. Taken together with the COVID threat, SPDR S&P Retail ETF (XRT) could offer a low risk short sale opportunity with 10% to 20% short-term downside. Better yet, the fund just failed a breakout above the January peak near 100, potentially signaling a long-term top and significant change in trend.

The Natural Gas futures contract rose 8.48% on Friday while the Crude Oil contract fell more than 13%. This bullish divergence highlights growing shortages across Europe and Asia and the potential for the long-suffering commodity to break out above the 7-year high posted in October. Cheniere Energy Inc. (LNG) looks like an excellent way to play this long-term opportunity, with the stock trading at an all-time high after breaking out above 2014 resistance in the mid-80s in September.

For a look at this week’s economic events, check out our earnings calendar.

Disclosure: the author held Visa in a family account at the time of publication. 

Why Peloton Stock Is Up By 5% Today

Peloton Shares Move Higher After Company Announces Pricing Of Public Offering Of Its Stock

Shares of Peloton opened with a gap up today after the company announced the pricing of an underwritten public offering of its common stock. Peloton offered roughly 23.9 million shares at a price of $46 per share. Underwriters have the option to buy up to 3.26 million shares.

Peloton expects that net proceeds from the offering will total $1.07 billion. The money is expected to be used for general corporate purposes.

Earlier this month, the company announced the release of Peloton Guide, its first connected strength product. The prices for Peloton Guide start at $495. The product was not received well by the stock market, and it remains to be seen how it will perform when it is released in the U.S. and Canada in early 2022.

What’s Next For Peloton Stock?

It is a bit unusual to see that a stock gains ground after an offering was priced below recent lows. Perhaps, the market is reacting to Peloton’s ability to sell more than $1 billion of its stock near current price levels and believes that the offering will set a floor after the huge downside move which took Peloton stock from the $171 level to the $46 level.

The analysts remain skeptical about the company’s ability to make a profit, and earnings estimates kept moving lower in recent weeks. Currently, analysts expect that Peloton will report a loss of $2.84 per share in fiscal 2022 and a loss of $0.84 per share in fiscal 2023.

Peloton faces headwinds as people get back to gyms instead of exercising inside their homes, and the company will have to prove that it has a solid growth plan for the next few years. The equity raise provides Peloton with an opportunity to invest in its business, and the market will closely monitor how the money will be spent.

For a look at all of today’s economic events, check out our economic calendar.

Why Peloton Stock Is Down By 30% Today

Peloton Stock Dives After Company Cuts Full-Year Guidance

Shares of Peloton found themselves under strong pressure after the company released its quarterly results. Peloton reported revenue of $805.2 million and loss of $1.25 per share, missing analyst estimates on both earnings and revenue.

The company has also cut its full-year fiscal 2022 revenue guidance to $4.4 billion – $4.8 billion. In fiscal 2022, the company expects to reach 3.35 million – 3.45 million Connected Fitness Subscriptions.

Not surprisingly, analysts rushed to downgrade the stock after the company missed estimates and provided disappointing guidance. The influx of analyst downgrades put additional pressure on Peloton stock and pushed it from the $85 level towards the $60 level.

What’s Next For Peloton Stock?

Peloton stock, which reached all-time high levels near $170 at the beginning of the year, keeps moving lower as the company releases one bad news after another.

This year, Peloton had to recall its treadmills after reports of injuries and death. After this, Peloton cut the price of its bike to boost sales, which was interpreted as a sign of slower growth by many traders.

The cut in full-year guidance highlights the problem with growth. The situation with coronavirus stabilized, and potential customers look ready to choose fitness options outside their homes, which is bearish for Peloton.

Meanwhile, Peloton stock continues to trade at a rather rich valuation despite the huge pullback in 2021. Analysts expect that the company will report a loss of $2.17 per share in fiscal 2022 and a loss of $0.52 per share in fiscal 2023. It should be noted that earnings estimates have moved lower in recent months, and analysts will have to adjust their estimates after the disappointing quarterly report.

Peloton stock is down by about 65% from its peak, which may attract speculative traders. However, traders have to keep in mind that the story of fast growth looks broken, which is usually very bearish for momentum-dependent stocks like Peloton. At this point, it looks that the company will have to come up with positive catalysts to break the current downside trend of its shares.

For a look at all of today’s economic events, check out our economic calendar.

Zoom Dead Money So Far in 2021

Zoom Video Communications Inc. (ZM) reports fiscal Q1 2022 earnings after Monday’s closing bell, with analysts looking for a profit of $1.16 per-share on $990.2 million in revenue. If met, earnings-per-share (EPS) will mark a 26% profit increase compared to the same quarter last year. The virtual meeting provider has beaten estimates every quarter since coming public in April 2019, posting a 191.4% year-over-year revenue increase in the quarter ending May 31st.

Growing Competition in a Post-Pandemic World

The company continues to diversify its product catalog after 2020’s historic uptrend, driven by pandemic lockdowns around the world. Meanwhile, multiple competitors are offering alternatives to the Zoom platform at the same time that lockdowns have drawn huge political opposition, despite the rise of the Delta variant. It’s been a race against time for Zoom, seeking to replace lost income to maintain its rich valuation and high stock price.

Morgan Stanley analyst Meta Marshall upgraded Zoom to ‘Overweight’ last week, noting “we think that enterprise momentum, combined with margin headwinds dissipating, creates a positive setup into FQ2. While revenue expectations are not low, we believe they are doable, which combined with upcoming Zoomtopia and FY23 guidance in a couple of quarters, leaves us more optimistic on the stock at current valuation”.

Wall Street and Technical Outlook

Wall Street consensus has improved in the last three months, now standing at an ‘Overweight’ rating based upon 14 ‘Buy’, 1 ‘Overweight’, 11 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $242 to a Street-high $525 while the stock ended Friday’s session more than $75 below the median $416 target. This low placement highlights investor apathy toward pandemic beneficiaries, most recently illustrated by Peloton Interactive Inc.’s (PTON) steep post-earnings slide.

Zoom broke out above the 2009 high at 107.34 in February 2020, entering an historic uptrend that hit an all-time high at 588.84 in October, just weeks before Pfizer Inc. (PFE) and BioNTech SE (BNTX) announced the success of their vaccine. The stock has posted a long series of lower highs and lower lows since that time, crisscrossing the 200-day moving average and 50% rally retracement repeatedly since March.  Accumulation fell to an 8-month low last week, highlighting slow-motion profit-taking that could easily stretch into the fourth quarter.

For a look at all of this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Peloton Delivers Poor Earnings Report, Gets Subpoenaed By The DOJ and DHS

The past 24 hours haven’t been kind to Peloton, with the company reporting poor earnings for the previous quarter, and it is now in trouble with the authorities.

Peloton’s Q4 Earnings Report Was Poor

Peloton reported poor earnings for the fourth fiscal quarter yesterday, performing below what analysts had expected. The company’s revenue for the previous quarter was $936.9 million vs. the $927.2 million that was expected. However, the loss per share was $1.05 vs. the 45 cents that was expected.

In the last quarter, the fitness commodity manufacturer recorded a net loss of $313.2 million, or $1.05 per share. This is poor compared to the net income of $89.1 million, or 27 cents a share recorded in Q4 last year.

Although the total revenue of $936.9 million surpassed the analysts’ estimate of $927.2 million, it has slowed down from the $1 billion recorded in the third fiscal quarter. According to Peloton, its earnings could further be hurt in the short term as the company will reduce the pcost of its original Bike Machine by nearly 20%. In addition to these, Peloton said it would also be focusing some of its attention on its treadmill business, which has shown to be less profitable than its bicycles.

DOJ And DHS Subpoena Peloton

Peloton got into further trouble after the company revealed that the United States Department of Justice (DOJ) and the DHS (Department of Homeland Security) had subpoenaed it. The company has submitted documents and other data related to injuries reported by some of its customers.

The case stretches as far back as earlier this year when Peloton issued a recall of its treadmill machines, the Tread and the Tread+. The recall came after a child was killed in an accident, with several other users reporting injuries. Peloton resisted recalling the treadmill machines at the time despite regulatory pressure to do so. The company also revealed that it is currently being investigated by the SEC for its public information regarding the said injuries.

PTON stock chart. Source: FXEMPIRE

The poor earnings report and the investigation by authorities have sent Peloton’s stock price tumbling over the past few hours. PTON is down by over 7% in the past 24 hours and could slip lower if the negative press continues.

Year-to-date, PTON is down by over 30%. The stock began 2021 trading at $151 per share, but it is now trading around $106 per share.

Why Peloton Stock Is Down By 8% Today

Peloton Stock Declines After Quarterly Report Misses Analyst Estimates

Shares of Peloton gained downside momentum after the company released its quarterly results. Peloton reported revenue of $936.9 million and GAAP loss of $1.05 per share, beating analyst estimates on revenue and missing them on earnings.

The company stated that Connected Fitness Subscriptions grew to over 2.33 million while paid Digital Subscriptions increased to over 874,000.

In the next quarter, the company expects to report $800 million of total revenue. Connected Fitness Subscriptions are projected to grow to 2.47 million. Peloton has also stated that it reduced the price of Peloton Bike to $1,495 across all markets after it noted that price remained a barrier for some customers.

What’s Next For Peloton Stock?

The report was disappointing as the company missed analyst estimates and reduced the price of Peloton Bike. In the current inflationary environment, investors want to see prices grow rather than fall.

The guidance for the next quarter also looks modest which is not good for the company whose valuation depends on fast growth. The stock is currently trading at more than 200 forward P/E, and traders may start to ask questions about this sky-high valuation.

It remains to be seen whether Peloton will be able to convince traders that the recent decision to reduce the price of Peloton Bike was a smart move. Theoretically, lower price could expand the customer base and bring more subscription revenue, but weaker pricing in the inflationary environment may also be interpreted as a sign of slowing demand.

According to the report, Connected Fitness Subscription Workouts averaged 19.9 monthly workouts in the quarter, which indicated that customers remained engaged with the product. The market will likely pay close attention to this metric in the upcoming quarters to see if cracks start to appear in Peloton’s growth story. Meanwhile, the company will have to come up with new positive catalysts if it wants to see its stock go up from current levels.

For a look at all of today’s economic events, check out our economic calendar.

Peloton Could Rally After Earnings

Peloton Interactive Inc. (PTON) reports fiscal Q4 2021 earnings on Thursday, with analysts expecting the fitness provider to post a $0.34 per-share loss on $923.5 million in revenue. If met, the loss will mark a turnaround from the $0.27 profit booked in the same quarter last year. The stock ended a five month slide in May after beating Q3 top and bottom line estimates, despite a loss of $0.03 per-share, but remains stuck in the lower half of an 11-month trading range.

Shaking Off Headwinds

The stock fell with other COVID beneficiaries at the start of 2021 and turned higher when the Delta variant hit American news headlines. Controversies about treadmill recalls and injured kids are receding but fitness centers have remained open during the latest outbreak and they’re jammed with customers tired of working out in private. Peloton has responded with initiatives that include armband heart rate monitors and partnerships with corporate wellness providers.

Hedge funds are also moving back into Peloton, as evidenced by recent SEC disclosures. Tiger Global, Viking Global, and Third Point Management all increased position size during the quarter, suggesting comfort with the company’s long-term outlook. That buying pressure has shown up on technical charts as well, with accumulation readings lifting above 2020 levels, even though the stock is still trading more than 60 points under January’s all-time high.

Wall Street and Technical Outlook

Wall Street consensus has dipped in the last three months and is now standing at an ‘Overweight’ rating, based upon 20 ‘Buy’, 2 ‘Overweight’, 5 ‘Hold’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $45 to a Street-high $185 while the stock closed Friday’s session more than $25 below the median $135 target. This humble placement should support higher prices if Peloton beats top and bottom line estimates this week.

Peloton rallied above the 2019 peak at 37.02 in May 2020 and took off in a powerful uptrend that posted an all-time high at $171.09 in January 2021. It got cut in half into May and bounced, reversing again after mounting the 50% selloff retracement. The stock is now wrapping up the third month of testing at the 200-day moving average while weekly Stochastic readings have hit oversold levels. This is a potent combination for a relief rally after this week’s confessional.

For a look at all of this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Peloton (PTON): Fear or Cheer?

Since its January peak at just over $167, it’s down nearly 50% to roughly $86 as of this writing. Below you can see that Peloton saw buying in the shares in late 2020 and January.

Recently, it’s fallen far:

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Recent news broke that Peloton is recalling its Tread and Tread+ treadmills. This is due to 70+ safety incidents and a child’s tragic death.

Investors who bought into the growth story might be wondering if it was a colossal mistake.

To answer that, let’s first let’s revisit why Peloton looked like a great setup in the first place:

Peloton boasts:

  • 1-year sales growth of 100%
  • 3-year sales growth of 103%
  • 1-year earnings growth of 62%
  • Gross profit margin of 45%

It’s also owned by the big boys and girls with 78% institutional ownership. Peloton was also collecting lots of Big Money buy signals according to MAPsignals data: logging 12 Big Money buys since July 1st, 2014.

That just means that the shares were increasing in price as volumes increased.

Things looked great for Peloton to continue its massive bull run. But suddenly in mid-February, growth stocks met headwinds. Since then, high-growth stocks fell from grace in favor of value and dividend stocks.

PTON was already falling 30-40% when tragedy struck for some pets and children and their new product is now in recall for repair or refund. They’ve sold roughly 125,000 tread units as high as $4200 each. The company said this will impact Q4 sales by -$165 million.

This is definitely not great for the short-term at least. It’s got a lot of investors spooked and running for the hills.

The question remains though: Is it time to grab it or bag it?

Let’s first look at their most recent earnings report.

Peloton just reported a 3-cent EPS loss, beating the 12-cent loss expectations for their fiscal third quarter. They posted $1.26 billion in sales, beating estimates of $1.1 billion. Revenue grew a shocking 141% from a year ago.

PTON showed $239.4 million in subscription revenue, up 144%. This is a key point. The company looks like it sells exercise equipment, but they sell content. Their classes and content costs are a subscription fee paid monthly.

In a shareholder letter, Peloton explained they have over 4.4 million members (as of December 31, 2020). Total members grew 22.2% since the prior quarter, up from 3.6 million. At $39 a month, that’s $2 billion a year. And it’s growing.

Even with the recall impact, Peloton is still guiding $915 million in revenue for Q4, 2021.

First, the exodus from growth stocks dragged down the stock. Then terrible headlines hit further amplifying the stock’s pullback.

This reminds me of a current titan that was once a volatile young growth story: Tesla, Inc. (TSLA).

In 2013 news broke of a battery fire in the Model S after a driver ran over a large metal object. On October 3rd, 2013 a Reuters article read:

  • Two days after a video of a burning Tesla electric car went viral, the “green car” maker grappled with ways to contain the damage as investors shaved $2.4 billion off the company’s market value.
  • Tesla shares fell 4.2 percent to close at $173.31 on the Nasdaq. That came on top of a 6.2 percent drop on Wednesday.

I remember the media said Tesla stock was done. The story was ruined, and no one would buy their cars. The stock got smoked. Remember: it was trading at $173.

Now look at this chart:

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

The battery and subsequent engine fires from crashes, look tiny in the rearview mirror now. TSLA peaked at around $883 in January and then pulled back to $635 as of this writing. From the bad 2013 headlines the stock is up 267% after peaking up 410%.

Very few companies change the game like Tesla did for cars, or Peloton for exercise.

Remember, there tends to be gloomy headlines from time to time for nearly all stocks. Years later, investors will likely forget them. When you have a great growth story on your hands, it doesn’t always mean a smooth ride.

In the case of Peloton, it’s hit a snag. But times like these could represent potential opportunity for the long-term investor. Only time will tell.

Disclosure: the author holds a long position in TSLA in personal accounts at the time of publication, but no position in PTON.

Learn more about the MAPsignals process here.

For a look at all of today’s economic events, check out our economic calendar.

Why Shares Of Peloton Are Up By 5% Today?

Peloton Video 07.05.21.

Peloton Stock Rebounds After Sell-Off

Shares of Peloton gained upside momentum as traders rushed to buy the stock after the recent sell-off.

Peloton has recently provided its quarterly report, beating analyst estimates on both earnings and revenue. However, the market focused on the recall of Peloton’s treadmills, which is projected to cost $165 million.

Previously, the company insisted that its treadmills were safe if used properly, but it has succumbed to regulatory pressure and stated that its initial response to Consumer Product Safety Commission was a mistake. Peloton stopped the sales of treadmills and promised to introduce more safety measures.

What’s Next For Peloton?

Peloton shares tested highs at $171 at the beginning of this year, but company’s internal problems and valuation concerns pushed the shares towards recent lows at $80.48. This is a significant pullback that has clearly attracted speculative buyers who are willing to bet that the company will manage to successfully navigate the treadmill crisis and continue to grow.

The direct financial impact of the current crisis is not huge since the majority of company’s revenue comes from its popular bikes. The main question is whether Peloton will be able to quickly solve its problems with regulators and come up with a safer treadmill.

While Peloton shares have lost a lot of ground since the beginning of this year, the stock is valued at about 125 forward P/E for 2022 which is a very rich valuation even for the current market environment.

To justify this valuation, Peloton must grow at a fast pace, and it needs the treadmills to boost its revenue and expand its customer base. In this light, I’d expect that the market will focus mostly on the treadmill story rather than on the company’s financials in the next few months. If Peloton manages to solve the problem quickly, the stock will have a good chance to gain solid upside momentum.

For a look at all of today’s economic events, check out our economic calendar.