Bets against Peloton's stock are hovering near a record high - even after a recent plunge kickstarted by the company's ill-fated commercial
- Short wagers against Peloton stock are sitting near a record high after the company's holiday ad garnered intense backlash.
- Peloton stock fell 11% in the six days following the commercial's release.
- Traders piled into bets against a recovery, pushing short notional interest to a post-IPO record of $975 million on December 10, according to data from S3 Partners.
- That level of short interest accounts for nearly 80% of Peloton's freely trading shares.
- Watch Peloton trade live here.
Traders are spending more than ever to bet that Peloton's commercial-driven stock meltdown will continue.
Peloton's share price dropped 11% in the six days after its commercial inspired a fierce online backlash. Rather than be deterred by that weakness, traders continued piling into bets for a further decline, pushing notional short interest to a post-IPO record of $975 million on December 10, according to data financial-analytics firm S3 Partners.
That level of short interest accounts for nearly 80% of Peloton's freely trading shares, and more shares are set to hit the market when the company's post-IPO lockup period ends March 24. The period's expiration will allow early investors to offload their holdings for the first time.
Though much of the outcry against Peloton's ad has subsided, some analyst firms are also calling for the stock to fall lower through 2020. Citron Research, helmed by notorious bear Andrew Left, claimed on Tuesday the fitness-equipment company can fall to $5 per share in 2020. The price target implies an 84% tumble from Thursday's opening price.
Peloton may be the first company to merge streaming with exercise hardware, but "the lack of differentiation of its bike has finally caught up to it as the competition is not only making virtually identical exercise bikes but ones that are both more affordable and functional," the analyst firm said in its report.
Peloton stock fell as much as 9.1% the day of the Citron note's release.
The company traded at $30.70 per share at 3:45 p.m. ET Thursday, up approximately 20% year-to-date.
Despite the growing short interest, firms covering Peloton remain overwhelmingly positive in their view of the stock. The company has 20 "buy" ratings, one "hold" rating, and no "sell" ratings from analysts, and a consensus price target of $34.15, according to Bloomberg data.
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