Trading Concept
  • Home
  • Trading News
  • Email Whitelisting
  • Privacy Policy
  • Home
  • Trading News
  • Email Whitelisting
  • Privacy Policy
No Result
View All Result
Trading Concept
No Result
View All Result
Home Trading News

Peloton Has Tumbled From Its Peak. What to Do With Your Beaten-Down Shares.

by
November 24, 2021
in Trading News
0
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter
Text size

A Peloton stationary bike at the company’s showroom in Dedham, Mass.

Adam Glanzman/Bloomberg

It’s almost time to bid adieu to 2021, which means its time for an end-of-year review of your portfolio to identify losses and gains. Try to understand what went wrong and what went right—and why—and recalibrate for 2022.

If possible, take advantage of soured investments that might have long-term merit. If you bought a stock at a higher price, it might make sense from a tax perspective to take the loss against other gains and restart the investment from a lower price, a strategy known as “doubling up.”

RELATED POSTS

Air New Zealand to ask passengers to weigh themselves before boarding international flights

Opposition grows to debt ceiling deal measure that would end student loan payment pause


Peloton Interactive

(ticker: PTON), which rose to prominence during the pandemic and has since messily fallen from the market’s bullish summits into the ash heap of troubled companies. might just fit the bill.

Peloton, as most everyone knows, makes exercise bikes with video monitors that enable people to take classes with world-class instructors from their homes. The company enjoyed extraordinary success during the pandemic, only to be undone by manufacturing woes and ultimately by the Covid vaccine, which enabled gyms to reopen.

Yet Peloton continues to have a cultlike following. Instructors like Cody Rigsby have become celebrities. And the company has just begun a big trade-in program: People who buy a new bike can swap their old one for a $700 rebate and accessories.

Newsletter Sign-up

Retirement

Barron’s brings retirement planning and advice to you in a weekly wrap-up of our articles about preparing for life after work.

Investors who bought Peloton at higher prices could double up on the stock to reset the cost basis and position for a potential recovery. The deadline to buy new stock to capture losses for this year is Nov. 30. After that date, there won’t be enough time to avoid the Internal Revenue Service’s wash-sale rule, which restricts loss deductions by investors who buy the same holding within 30 days before or after a sale.

Peloton investors can buy the same number of shares and hold them for 30 days. On the 31st day, the original tax lot of Peloton shares—the stock you bought at higher prices—can be sold. Anyone who does that should be able to claim a loss on their tax returns. Consult your tax adviser.

While doubling up with stock is the usual method, Michael Schwartz, Oppenheimer’s chief options strategist, prefers using call options to limit risk and expense. The mechanics of the trade are the same, but options are less expensive than stock.

Schwartz recently told clients who bought Peloton near its high price to double up with March $45 calls, which cost about $6.60 when the stock was $42.97. On the 31st day, the original tax lot could still be sold, and investors would own only the equivalent number of calls. (Each call represents 100 shares, so you would need 10 calls to cover 1,000 shares, for example.)

Again, the time frame is critical. Should the stock be sold before 30 days have expired, investors would violate the wash-sale rule and the IRS won’t allow the loss, Schwartz counseled.

During the past 52 weeks, Peloton has ranged from $43.13 to $171.09.

Some will wonder why Schwartz chose a March call, which expires in about 120 days. The answer is simple. Peloton is a “show me, don’t tell me” company. The management team has arguably lost the trust of investors as the stock has tumbled from all-time highs. Plus, the company recently said that it wouldn’t need to raise capital, only to subsequently say that it would sell more stock to raise capital.

Still, the Peloton cult is a valuable asset, even if it is hard to value by traditional metrics. The double-up trade expresses a view that the company’s management team will rise to the occasion and try to be as good as the instructors and the community. If not, well, the cost basis was reset, a tax advantage was realized, and the journey of risk and return begins anew.

Steven M. Sears is the president and chief operating officer of Options Solutions, a specialized asset-management firm. Neither he nor the firm has a position in the options or underlying securities mentioned in this column.

Email: editors@barrons.com

ShareTweetPin

Related Posts

Air New Zealand to ask passengers to weigh themselves before boarding international flights

by
May 31, 2023
0

In this article AIR-NZ Follow your favorite stocksCREATE FREE ACCOUNT An Air New Zealand airplane waits for passengers at Wellington...

Opposition grows to debt ceiling deal measure that would end student loan payment pause

by
May 31, 2023
0

US House Speaker Kevin McCarthy, a Republican from California, arrives to the US Capitol in Washington, DC, on Wednesday, May...

This under-the-radar real estate stock could be a winner of the A.I. boom

by
May 31, 2023
0

The boom in artificial intelligence should create a big winner in one of the economic areas investors are most worried...

MLB will broadcast San Diego Padres games after Diamond Sports stops payments

by
May 31, 2023
0

Daniel Camarena of the San Diego Padres hits a grand slam during the fourth inning of a baseball game against...

Advance Auto Parts shares plummet 30% after dismal results, cuts to outlook and dividend

by
May 31, 2023
0

In this article AAP Follow your favorite stocksCREATE FREE ACCOUNT Customer vehicles sit parked outside an Advance Auto Parts automotive...

Next Post

Stocks fall as higher yields hit tech names again, retail earnings disappoint

Cathie Wood says her firm is testing a more aggressive strategy that would be 'Ark on steroids'

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

email

Get the daily email about stock.

Please Enter Your Email Address:



By opting in you agree to our Privacy Policy. You also agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

MOST VIEWED

  • WHO says Covid vaccine booster programs will prolong pandemic

    0 shares
    Share 0 Tweet 0
  • Forget Tesla — this auto stock is the one to buy right now, analyst says

    0 shares
    Share 0 Tweet 0
  • Spin or Split? AT&T Has a Big Decision to Make on Discovery Stake.

    0 shares
    Share 0 Tweet 0
  • Here’s how Carl Icahn is positioning for a possible recession in America

    0 shares
    Share 0 Tweet 0
  • Some lawmakers and their families are betting thousands of dollars on crypto

    0 shares
    Share 0 Tweet 0
  • Home
  • Trading News
  • Email Whitelisting
  • Privacy Policy
All rights reserved by tradingconcept.net
No Result
View All Result
  • Email Whitelisting
  • Home
  • Privacy Policy

All rights reserved by www.tradingconcept.net