Great opportunity to take advantage of a beaten down stock and earn healthy profits.
Peloton Interactive, Inc. $PTON: NYSE was a bubble stock from the pandemic times I am sure most of you remember. After a successful IPO the stock quickly rose to ridiculous heights due to crazy growth assumptions that everyone would own this bike in their home and pay monthly fees for interactive coaches. On September 16 2019 the shares began trading at $29 and reached a high of $155 on January 18th 2021 a 5x gain in a little more than 1 year. As the pandemic ended and consumers decided to return to the gym or other fitness classes the share price collapsed to a low of $3 on August 12 2024.
The company operates integrated fitness platform in North America and internationally offering connected fitness products under the Peloton Bike, Peloton Bike+, Peloton Tread, Peloton Tread+, Peloton Guide, and Peloton Row names. The company was founded in 2012 and is headquartered in New York, New York.
Today the shares trade at much more reasonable levels in the $6 range and could be a great long term hold for patient investors. Following the strong Q2 performance, Peloton significantly raised its profitability and cash flow guidance for the full fiscal year 2025. The company now expects Adjusted EBITDA to be between $300 million and $350 million, a $60 million increase from the previous range ($240M - $290M). The FY25 Free Cash Flow target was also substantially lifted, with the company now aiming for at least $200 million, up from the prior target of $125 million+. Management attributed this increased optimism to faster-than-anticipated cost savings, improved visibility into hardware sales post-holidays, and working capital efficiencies.
While I would like to be a long term shareholder I would rather sell put options today for the obligation to buy shares. I do not know how quickly the company will grow or how that will affect the share price in the short term so I want to be paid today a fantastic return for the chance to buy shares.
The put option I am interest in today is:
Sell PTON 6 P 8/15/2025 for $0.35. For the obligation to purchase shares at $6, which I feel is a good price to pay at this time, this is an 85% annualized return. If shares are greater than $6 on August 15 2025 you keep the premium and can enter a new trade with your capital. If shares are below $6 you will buy shares at $6 and can either hold for the long term or turn around and sell covered calls for additional income.
Disclosure: The author plans on being long PTON within 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.