Wednesday's Market Minute: There Are Too Many Companies

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It's time to accept the fact that there are too many publicly traded companies right now that are either not viable businesses models or are too closely overlapping with similar ones that would make more sense as a combination.

Yes, that includes Peloton. I have never seen the rumor mill churn out speculation as quickly as in the case of this stock. Wow. Who decided Peloton was Too Cool to Fail? I get it, the instructors are hot and the bike feels like the real deal. But what does Apple want with a bike? One of the two in my building is already broken after 18 months. Are these things even meant for multi-person use? Maybe Apple would like to have its original programming on the Peloton screen, but why's it need a warehouse full of exercise equipment that no one's buying right now? Why would Nike want it? Lululemon's Mirror purchase is doing little to threaten Nike's lead in global athletic wear.

I hate to say it, but I think the reason we have so many takeover rumors in Peloton is because Wall Street analysts need an intellectual bailout. Instead of admitting they got sucked into the most obvious bubble of the COVID Bubble, they're trying to spin it as an incredible sale. The only problem is, similar declines are happening all over the place as COVID unwinds and it becomes clear just how extremely analysts miscalculated the COVID valuation bubble. Maybe the stock price is back below its IPO level for a reason: because it never should have IPO'd in the first place. Right now, Peloton looks like a dumpster fire with no obvious extinguisher in sight beyond a charitable takeover by some benevolent corporate factor. If the company behind the top COVID consumer sensation can't go it alone, what's to say of all the random, ridiculous, literal moonshot companies that SPAC'd or IPO'd the last 18 months? Are we to believe that just because some of these are down 60%, they shouldn't go all the way to zero? 

1,100 companies in the Russell 3000 Index are unprofitable on a 12-month basis. Some of it's from the shockwave out of COVID epicenter industries like travel, but most of it is just random stuff across every sector, from electric vehicle wannabes to e-commerce and streaming also-rans, to one-trick cloud mousetraps and all the way up to space scams. Oh, and don't forget the Trump media SPAC for the Trump social media platform that's not even in beta phase yet. Just one example of many that are not only pre-profit, but pre-revenue. What's the deal with Lyft? They can charge me $20 to go a single mile in an uncrowded city and still lose money? Yikes. What's up with Virgin Galactic? Only 2 customers every six months?? 

Too much money, too much time, and the wild imaginative capacity of the TikTok generation created ample opportunity for silver-tongued salesman to dump their corporate waste into the market's backyard. Surprise! It's just as toxic as the cynics predicted. Get ready: this garage sale is going to have some freebies.

Image sourced from Pixabay

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