The company doesn’t make anything special, let alone money.

Oh, and two of its founders up and left the company earlier this week.

These facts would steer investors away from any company.

But with our Stock Power Ratings system, you can get to the heart of a company’s stock movement and financial picture and opt out before other investors.

Enter Peloton Interactive Inc. (Nasdaq: PTON).

Peloton launched its initial public offering in 2019 to much hoopla.

The company makes and sells indoor bicycles and subscription services that allow users to take part in live studio exercise classes.

Quarter after quarter, it failed to deliver profits, and excitement faded.

PTON Stock Ratings

PTON Stock Ratings in September 2022.

Peloton stock scores a “High-Risk” 1 out of 100 on our Stock Power Ratings system, and we expect it to underperform the broader market over the next 12 months.

PTON Stock: Sluggish Momentum + Weak Fundamentals

Here is where I usually tell you about impressive company milestones.

Not so much for PTON:

  • In its recent quarterly report, the company recorded $678.7 million in sales — that’s a 30% drop in sales from the previous quarter!
  • Its total gross margin for the quarter was negative 4.4%.

That shows why PTON scores a 13 on growth.

It also scores in the red on our other five metrics.

PTON has negative price-to-earnings and price-to-sales ratios, meaning it’s not even staying afloat financially. It scores a 22 on value.

The company has a miserable return on equity of negative 240% and a return on investment of negative 89.3%, earning it a 13 on quality.

All of this tells us folks are paying way too much for the stock, and its ledger has more red ink than one of my high school English papers.

Peloton stock chart

Created in September 2022.

PTON stock had a brutal 12 months, falling 90.3%.

Its leisure goods peers dropped an average of 42.4% over the same time.

Peloton stock scores an atrocious 1 overall on our proprietary Stock Power Ratings system.

That means we consider it “High-Risk” and expect it to underperform the broader market.

It makes no money.

It produces nothing special.

And a quick look at our Stock Power Ratings system shows that even before its management exodus, PTON was a stock to avoid.

Stay Tuned: “Strong Bullish” Heavy Machinery Stock

We’re returning to our original Stock Power Daily format on Monday.

Stay tuned — I’ll share all the details on a heavy machinery stock that sports an outstanding 98 rating overall.

Safe trading,

Matt Clark, CMSA®
Research Analyst, Money & Markets

P.S. I’d love to hear what you thought about my Stock to Avoid article today. Was it valuable? Would you like us to continue sharing “High-Risk” stocks on occasion, so you know what to stay away from?

Would you prefer that we only share “Bullish” and “Strong Bullish” stocks?

Write in and let us know!