Hedgeye Thinks Peloton's Stock Is Going To Drop Another 50%

Hedgeye Risk Management co-founder Brian McGough said Wednesday there’s plenty more downside to come for Peloton Interactive Inc PTON.

McGough said Hedgeye will be releasing a report at 2 p.m. Wednesday making his bearish case against Peloton.

"We're presenting our case today at 2pm as to why $PTON either should never have gone public, or picked the wrong strategy. Either way we get to $2bn-$4bn cap vs $9.5bn today. Once the lockup expires in March, watch out…" McGough said in a tweet.

A $2 billion to $4 billion market cap implies a price target range of between around $7 and $14 for Peloton shares.

Left Weighs In

McGough isn't the only high-profile Peloton bear to issue an aggressive price target this month. On Dec. 10, Citron Research editor and notorious short seller Andrew Left said Peloton is headed to $5 by the end of 2020.

Left said the stock's $15,631 in enterprise value per subscriber is astronomically high compared to its peers and compared Peloton to GoPro Inc GPRO back in 2014, a stock that is down 92.6% in the past five years.

Left admitted to owning a Peloton bike and said his bearish take on the stock has nothing to do with the quality of the product or the company and is simply a reflection of his take on the stock’s valuation.

“The takeaway is clear. Peloton at $10BN or even $5BN makes zero sense,” Left wrote.

Benzinga’s Take

High-profile tech IPOs haven’t performed particularly well in 2019, including Uber Technologies Inc UBER, Lyft Inc LYFT and Slack Technologies Inc WORK. So far, Peloton shares are up 12.5% overall from its IPO price, but McGough seems to be suggesting a significant amount of insider selling could be coming along with the lock-up expiration in March.

Peloton's stock traded down 2.8% to $31.98 per share at time of publication.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Related Links:

Citron Thinks Peloton's Stock Is Going To $5, Compares It To GoPro

Everybody Hates The Peloton Ad, But Stock Is Doing Just Fine Since The IPO