The Reason I'm Not Investing in Peloton Interactive
Another week, another pumped-up tech IPO.
Earlier this month, it was Datadog, the fast-growing data analytics software, that got off to a hot start, but has since begun dropping. This week, it's Peloton Interactive (NASDAQ: PTON), maker of connected fitness equipment and an accompanying app. After being initially priced at $29 -- near the top of its expected IPO range -- shares finished their first day of public trading down 11.2%.
There's a lot of skepticism regarding Peloton's prospects: The equipment is too expensive, the economy is slowing, bikes and treadmills with screens attached to them are just a fad, etc. I think the company has a future, and the increasing awareness and desire to stay fit will help. But that alone isn't a reason to invest. In fact, there's recent historical evidence to back this up, and it all has to do with profit margins.
Source Fool.com
