Peloton (PTON) is a Sell
Eva Ados, COO and Chief Investment Strategist at ERShares, recently appeared on CNBC’s Three Stock Lunch to discuss the evident ‘corporate greed’ within Peloton’s management. Ados indicates the deep-rooted factors that are contributing to the downfall of Peloton.
Pandemic Darling becomes Corporate (Greed) Nightmare
She refers to Peloton as a ‘Covid Darling’ company struggling with growth now that the COVID restrictions are removed. Ados finds a correlation between their struggle to maintain growth with ‘corporate greed.’
“There was key insider trading of $500 million at the top of the market; $400 million in key executive compensation while they had $1.90 billion in losses. That’s why gross margin was dropping,” Ados stated during the interview.
Top executives reaped the benefits of this significant compensation, while employees and shareholders suffered the consequences. Nearly 3,000 employees were fired as a result. Ados expects future margins to deteriorate further ahead.
Peloton’s Transition to Offshore Manufacturing
Peloton also announced its plans to transition to third-party manufacturing to help lower costs and widen flexibility. Ados emphasizes that beyond Peloton’s initiatives to lower costs, the deteriorating fundamentals are related to the corporate culture it fosters. Corporate culture will not be restored for a long time.
Credit to CNBC Three Stock Lunch
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