26 September 2019: Peloton pedals into a rocky IPO
Peloton, the maker of internet-connected exercise bikes, went public at $29 a share and closed its first day about 11 percent lower. Investors questioned its losses and rich valuation. The pandemic changed everything months later, sending the stock soaring as gyms closed. Then demand normalized, and the stock collapsed far below its IPO price. Temporary demand made a permanent-looking boom.
The lesson: Do not mistake a temporary surge in demand for a permanent change in a business.
What it meant for investors
$1,000 in Peloton at the start of 2020 → $214 today, vs $2,092 in the S&P 500.
We start the clock at the start of 2020, the first year in our price data after the event. That is a loss of $786, while a plain index fund over the same years made $1,092.
What Peloton teaches: Extrapolating a temporary demand surge is a classic error, especially when a company expands capacity to meet demand that will not last.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2020 | $28.00 | $214 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought Peloton? Every starting year and the full story →
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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