Below we present the list of the top 5 stocks for 2022 according to Chet Kapoor’s Tenzing Global Investors. For our methodology and a more comprehensive list, go directly to Top 10 Stocks for 2022 According To Chet Kapoor’s Tenzing Global Investors.
5. Peloton Interactive, Inc. (NASDAQ:PTON)
Closing out the first part of our list of Tenzing Global’s top stocks for 2022 is fitness product manufacturer Peloton Interactive, Inc. (NASDAQ:PTON). The firm initiated a new position in the company consisting of 100,000 PTON shares valued at $8.71 million at the end of Q3.
Peloton Interactive, Inc. (NASDAQ:PTON) shares have crashed by nearly 85% from their peak in February 2021, when surging demand for their connected-fitness devices had the market salivating. The company struggled to meet the intense demand, which it compensated for by spending over $800 million to buy another fitness bike manufacturer, Precor, as well as build another new plant in Ohio.
However, with competition in the space intensifying and gyms reopening, demand for Peloton Interactive, Inc. (NASDAQ:PTON)’s equipment has begun to slacken, making those expenditures look like huge mistakes for the company. Peloton’s connected-fitness device revenue fell by 17% year-over-year in Q3 and the company has hired consulting firm McKinsey with the goal of cutting costs. Nonetheless, Tenzing clearly believes that PTON shares were a good buying opportunity and that the company will find its footing as a leader in the connected-fitness space.
Miller Value Partners, an investment management firm, published its “Miller Opportunity Equity” fourth quarter 2021 investor letter and mentioned Peloton Interactive, Inc. (NASDAQ:PTON). Here is what the fund said:
“Money losing growth stocks posted the biggest losses late in the year. Jim Cramer termed this behavior getting “pelotoned,” as Peloton is the poster child for what we experienced. At recent prices ($31.33 as of close 1/14/22), Peloton is more than 80% off its highs. It’s reversed nearly all its pandemic gains, trading at levels close to the IPO price ($29).
We previously owned Peloton, so we know the company well. We bought Peloton after the IPO based on our belief it was a misunderstood consumer brand pegged as a faddish hardware company.
It benefited enormously from the pandemic as demand surged and customer acquisition costs plummeted. We expected these dynamics to reverse as the environment normalized from stay-at-home. We sold in late 2020 because we thought it was fully valued around $100. Growing risks created a poor risk/reward.
At current prices, it’s interesting once again and we’ve resumed work on it. Market sentiment towards money losers remains quite negative. Peloton’s prospects, like others, ultimately depend on its ability to drive free cash flow over the long term. We reference Peloton because it’s an extreme example of behavior we’ve seen more broadly.”
