Exercise bikes aren’t a new niche, but Peloton (NASDAQ: PTON) continues to command the home fitness space. Internet-connected fitness platform Peloton Interactive Inc. bought a competitor (Precor) and launched a new treadmill.
Peloton continues to see robust demand for its connected fitness platform and its increasing subscriber numbers continue to validate its hardware, software and content investments. But can this stock provide a tailwind for your efforts to diversify your portfolio? Let us teach you how you can add PTON to your portfolio and why the Peloton bike can make waves for a wide range of people—riders and investors alike.
How to Buy PTON Stock Summary
Follow these straightforward steps when you’re ready to invest in PTON — a company at the nexus of fitness, technology and media. Technology companies like this have a business model with more than one revenue stream. These financial instruments have more options for growth, and market participants should be aware of that when they start buying.
- Find a broker to trade with. An online brokerage is your first point of contact if you want to buy PTON stock. Benzinga maintains a list of top recommendations for new and seasoned traders. Pick a broker that complements your investing needs.
- Open a trading account. Once you’ve identified a preferred brokerage, open your trading account. Most online brokers will let you complete this step within minutes, except for the occasional verifications that should come back positive after a few days.
- Practice with a stock market simulator. Some brokers will provide a virtual trading experience that lets you test your trading strategies without risking a dime on an actual stock exchange. Thinkorswim by TD Ameritrade and TradeStation’s simulator can help you hone your trading skills.
- Fund your account. Most brokers will let you fund your trading account directly from your bank account through wire transfer. Other funding options include check and ACH deposits. Confirm the deposit limits, costs and after how long your funds will be available for trading.
- Buy PTON stock. It’s time to buy your stock!
How to Buy PTON Stock
If its 4.4 million loyal members are something to go by, Peloton is expected to stay in shape thanks to its high growth, strong retention, margin expansion and efficient subscription acquisition. Follow these steps to buy PTON stock.
- Pick a broker.
You can find numerous top-of-the-line brokers to choose from and offer a similar menu of investment options. That leaves you with a ton of other factors to consider in an online broker. No single broker will satisfy all these factors, so consider all these options as you narrow down to what seems like a perfect fit for your needs:
Account minimums: Some brokers place a minimum account requirement that you must meet to start trading. While the mandatory account minimum can skew toward $500 or more for some brokers, you can still find highly-ranked brokerages with a $0 account minimum. Check how much you can afford as an initial deposit as well as the penalty for not satisfying this requirement.
Account fees: Account fees may eat into your trading profits, and while you can’t avoid them altogether, there’s room to cut them down. You can expect to incur a fee for transferring funds, placing trades or closing your account. The easiest way around most account fees is to choose a broker that doesn’t charge them entirely. Even so, annual fees, trading platform subscriptions and inactivity fees are not uncommon among most brokers.
Commissions: While commission charges may apply depending on your broker, most online brokers don’t charge commissions for stock trades.
Discount broker vs. full-service broker: The type of broker you prefer often comes down to the level of freedom your trading strategy accommodates. A discount broker lets you buy and sell stocks online without any human intervention while a full-service broker dedicates an individual to execute your trades. While full-service brokers are typically more expensive, the extra cost comes with the advantage of personalized investment planning services, like guidance on what stocks to buy.
Trading platform: Check whether your broker provides an intuitive, user-friendly trading platform. Some brokers will top it up with a desktop or mobile app.
Educational resources and tools: If you still need a little hand-holding, educational resources and tools can help inform your investment decisions. Market analysis and insights through your broker may also be worth the extra money if you don’t have time to do your own research.
- Decide how many shares you want to buy.
This is probably the easiest decision you’ll have to make since your purchasing power is often based on your budget. If you’ve funded your account with $3,000 and PTON’s current stock price is $150, you could own 20 shares of PTON stock. The level of exposure you want on a given stock will depend on your risk tolerance.
- Choose your order type.
Different order types may result in vastly different trading outcomes. It’s important that you understand the distinctions among the most common ones.
A bid, or the bid price, is the maximum amount of money you’re willing to pay for a single share of PTON stock.
An ask, or ask price, is the minimum amount of money you’re willing to sell your shares. Assuming PTON is priced at $140, you can set your ask price at $150. When PTON reaches $150, your sell order will execute.
The spread is the difference between your bid and ask price. If your bid for PTON is $140 and the ask price is $150, the spread is $10.
A market order is an order to buy or sell a security immediately and it typically executes at the current best available price. This order type ensures an execution but doesn’t guarantee a specific price.
You should place market orders during regular market hours, otherwise, they’ll execute at the next market open, which might turn out significantly lower or higher from its previous close.
A Limit Order
A limit price is an order to purchase or sell a stock with a restriction on the minimum price you can receive or the maximum price you can pay. A buy limit order only executes at the set limit price or lower and a sell limit order only executes at the limit price or higher.
For instance, if you want to buy shares of PTON stock for no more than $100, you could submit a limit order for this amount and your order will only execute when the price of PTON is $100 or lower.
A stop order tells your brokerage to buy or sell PTON stock once its price hits the specified price, known as the stop price. Your stop order will only execute if the stock reaches the stop price. The stop price is usually set in the opposite direction an investor hopes the stock will move. It’s a way of limiting losses or protecting your gains.
- Execute your trade.
Executing a trade simply means completing your buy or sell order for a security. Your order will only execute when it’s filled. Your order may take longer to execute if there aren’t enough shares available for the specific price, placed during extended trading hours or your limit or stop price hasn’t been reached.
Best Online Stock Brokers
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PTON Stock History
Peloton is the world’s top interactive fitness platform, boasting a community of over 4.4 million members. The company introduced connected, technology-enabled fitness anytime, anywhere.
Since shares of its Class A common stock were sold in its IPO in September 2019 at $29 per share, Peloton stock price has ranged from $17.70 to $171.09 through January 31, 2021. For Fiscal 2020, 2019 and 2018, Peloton recorded total revenues to the tune of $1,825.9 million, $915.0 million and $435.0 million, a representation of over 100% year-over-year growth.
On December 21, 2020, Peloton announced its agreement to purchase Precor, one of the world’s leading commercial fitness equipment providers. Through the purchase, Peloton aims to bolster its domestic manufacturing capabilities and enhance its consumer and commercial offerings.
Peloton’s largest revenue share is attributed to the sale of Peloton Connected Devices, but growing digital subscriptions are also creating tailwinds for potential revenue growth.
Peloton is listed on the NASDAQ Global Select Market under the ticker symbol PTON.
Pros to Buying PTON Stock
Peloton’s strong financials could make it a good buy-and-hold option for your portfolio. Its connected fitness subscriptions have grown 134%, paid digital subscriptions grew 472% and total members grew to over $4.4 million. This outperformance has prompted the company to raise all its fiscal 2021 guidance metrics with the latest expectations for total revenue coming out to at least $4 billion.
Peloton’s extraordinary success has been attributed to the fact that it’s been operating among less competition. And while its strong moves will attract new players into the space, Peloton appears unfazed — at least for now.
The extensive market reach Peloton enjoys is also a major talking point for investors and hedge fund managers. Peloton currently enjoys over 4 times the volume of Google searches over its closest competitor. No alternatives match this level of customer interest, not forgetting its demonstration videos fetch far more views than its competition.
Cons to Buying PTON Stock
Peloton doesn’t have a long history of financials, so it may still not look as attractive an opportunity if your investment decision is largely based on a company’s history.
The company still doesn’t issue dividends to shareholders, so you’ll want to drop it off your list if you like some passive income in the form of dividends.
Pedal Your Way to a Powerful Portfolio
Peloton’s long-term outlook remains attractive as COVID-19 closures work in its favor in the immediate future. Earnings estimates are encouraging and should the pandemic’s end slow down its at-home fitness momentum, its acquisition of Precor promises a new avenue of growth, higher manufacturing capacities and new revenue streams.
Even so, PTON should find solutions to its delivery and support issues, otherwise, it won’t hold the momentum. Our recommended online brokers can help you hop in on the PTON momentum today.