Peloton's Relentless Downside Causes "Bloodbath" for Investors

Peloton Interactive (PTON) was a darling stock during the COVID-19 pandemic. As millions of people were stuck at home, the demand for its exercise equipment and supporting services surged as did its stock price. But as restrictions were relaxed and people were free to move about, the demand for Peloton's products faded and the stock crashed.

The stock's weekly close fell from a peak of $162.72 on December 12, 2020 to a low of $3.03 on April 19, 2024, a 98.14 percent decline.

3D Chart of All Buy and Sell Returns

The peak to trough loss represents only one buy and sell return for the analysis period. To appreciate the full scope of the battering that investors experienced as the stock price went into a multi-year downside we need to examine all of the 28,680 buy and sell returns for the 240 weekly closes from October 18, 2019 through May 15, 2024.

The following 3D chart of weekly buy and sell percent returns shows all 28,680 returns. The buy and sell returns include the continuum of long-term buy-and-and hold returns to short-term trade returns.

The profitable returns are shown in green and the unprofitable ones in red.

During the 240-week period only 5,837 (20.35%) buy and sell returns made money and 22,843 (79.65%) lost money making the ratio of unprofitable returns to profitable returns 3.91.

In addition, a total of 16,976 buy and sell returns were losses of 50 percent or more. And 5,827 buy and sell returns were losses of 90 percent or more.

Overall, most PTON investors experienced a dramatic bloodbath.

Losses occurred from buying at relatively high prices on the price upside before the peak then selling after the peak. Also buying and selling on the downside after the peak led to losses. Buying high and then selling low does not produce profits.

The profitable returns resulted from buying low and selling higher. Most profitable returns occurred when buying and selling on the price upside or selling shortly after the peak. A few profitable returns occurred on the downside during short-lived rallies.

PTON's cascade of unprofitable buy and sell returns resulted from a multiyear downside trend after the stock peaked. This type of price pattern makes it difficult to make money because most buy and sell opportunities are unprofitable.