Peloton: Wait For The Crash, Then Buy The Stock

Rocco Pendola profile picture
Rocco Pendola
7.87K Followers

Summary

  • More than a few readers branded me crazy when I labeled Peloton a future dividend aristocrat.
  • In this article, I still take the long view on the company, though not quite as long.
  • If Peloton ends up a dividend aristocrat, I might not be alive to see it - and I'm 45 years young!
  • However, there's more than good reason to buy the stock now, particularly on the crash that will likely come alongside eventual resolution of the pandemic.

In a recent Seeking Alpha article, I labeled three stocks - Apple (AAPL), Starbucks (SBUX), and Peloton (NASDAQ:PTON) - future dividend aristocrats. That last one rendered me crazy in the eyes of many. This is fine. Hardly unexpected. While I can see why you might think the notion of high-flying Peloton becoming a dividend aristocrat sounds insane today, don't dismiss it out of hand.

But setting what could happen decades from now aside, don't dismiss Peloton as a great growth stock to buy today or, better yet, on the eventual weakness that's sure to come.

Did you see Netflix's (NFLX) red envelopes in mailboxes from coast to coast in the early 2000s and dismiss the company then?

Did you blow off Apple (AAPL) as iPod led to the ubiquity of iPhone?

Did you consider Amazon.com (AMZN) a fad as mail carriers tossed its iconic boxes over every fence on your block? Hopefully not, because it now takes a fleet of delivery drivers, of multiple affiliations, to deliver Amazon's mail.

With this in mind, we'll all be better off if we don't have the same conversation around Peloton we had around Netflix and Amazon (less so Apple) 10 years ago. I led the bearish the charge on Netflix. I was unabashedly bullish Amazon. So I have experienced and reflected on both sides of the story.

The lesson - I spent years lamenting Netflix's balance sheet. Anti-Amazon folks cried because it "didn't care" about turning a profit. Both stances proved nothing short of idiotic. They were definitely flat wrong. Netflix and Amazon put every dime they could get their hands on back into their respective businesses. They did it differently, but with pretty much the same general mindset.

The success of these two stocks alone should stop us from treating today's Amazons

This article was written by

Rocco Pendola profile picture
7.87K Followers
Based in Los Angeles, Rocco Pendola is Seeking Alpha's Director of Tier 1 contributors. If you're interested in becoming a Seeking Alpha contributor, message or email me. If you're currently a Seeking Alpha contributor and have questions or would like to discuss your contributions and status on the platform, also feel free to make contact.

Disclosure: I am/we are long AAPL, SBUX, CVS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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