Peloton 2021–24: the Stage 4 that kept looking cheap

A favorite, then a warning

In January 2021 Peloton was one of the best-known stocks of the pandemic, near $167. By the summer of 2024 it was under $3. Almost everyone who bought on the way down believed they were buying a bargain.

Here is the whole fall, week by week, with the stage underneath.

Step by step

Spring 2021: the first crack. After peaking near $167 in January, the stock stalled, swinging widely without making progress. In May, the month the company recalled its treadmills, it slid below its 30-week line, and the line began to roll over.

Summer 2021: a base that wasn't. From July to August the price went sideways between about $100 and $126 and got back above its 30-week line, which had only just stopped falling. Then it broke lower, and in September Stage 4 resumed with the stock near $96. At that point it had lost more than 40% from its high. Selling hurt, and it saved you almost everything that came next.

November 2021: 35% in a day. On November 5 the stock fell 35% in a single session after the company cut its sales outlook. It was now about two-thirds below its high, and still in Stage 4.

Early 2022: rallies inside a decline. On January 20 it fell another 24% in a day on reports of production cuts. In early February it jumped more than 50% in two days on takeover talk and a change of chief executive. That rally stayed below a falling 30-week line: a bounce inside Stage 4, not a turn. By September 2022 the stock was under $7.

Early 2023: a breakout that failed. The selling slowed, and from December 2022 the price based between about $8 and $13. In early February 2023 it jumped 26% in a day, breaking out to about $16, and our classification moved it into Stage 2. Within ten weeks it was back near $10, below its line, and by May it was in Stage 4 again.

2023 and 2024: the long tail. Another 23% one-day fall came in August 2023. By mid-2024 the stock was under $3.

Why "cheap" kept getting cheaper

At every step, the stock looked cheap compared with where it had been:

Every one of those prices was "cheap" compared with $167. Every one of them was also far above where the stock ended up. The stage never changed its answer for long, because Stage 4 doesn't end when a stock has fallen enough. It ends when the selling runs out and a real base holds.

Why the base and the breakout failed

Both looked like a turn to hopeful buyers. Neither gave what stage analysis waits for, or keeps:

• The 2021 base came close, and still wasn't a buy. The price got above its 30-week line, which is how a real base begins. But a base is a reason to watch, not to buy: Stage 2 needs a breakout above the top of the range, with the line turning up. Peloton never got there, and a stock far below the level it broke down from, with a line that has only just stopped falling, can still roll over. This one did.
• The 2023 breakout was real, and still failed. It cleared its base on a big day, and within weeks it was back below the line. That is why every entry comes with an exit decided in advance (lesson 6): the stop turns a failed breakout into a small loss instead of a long ride down.

Stage analysis didn't need to predict a sales warning, a production cut or a change of management. It only needed you to stay out of Stage 4 and to keep a stop on the one breakout that came.