Peloton Expected to Report Third-Straight Quarterly Profit, and Two More Numbers to Know
Three numbers to start your day:
Peloton to Release Results for Last Quarter of 2020
Wall Street analysts expect Peloton Interactive (PTON) had 1.6 million so-called “connected fitness subscribers” at the end of 2020. That refers to the folks who pay $40 a month to access classes and features on Peloton equipment.
The trendy exercise equipment maker reports its results for the last quarter of 2020 this evening. Its stock is up almost 350% in the past year as the pandemic supercharged demand for its bikes, treadmills, and fitness class subscriptions.
Analysts are expecting to see just over a billion dollars in revenue and for Peloton to report its third-straight quarterly profit. But it’s an expensive stock with big growth expectations built into the price. Management’s guidance and comments about Peloton’s future may be more important than last quarter’s results.
Apple Announced a $14 Billion Bond Sale This Week
The bonds’ maturities span from five years to 40 years. But why does Apple, with nearly $200 billion of cash and equivalents on its balance sheet, need to take on debt?
The answer is that it doesn’t, but there are still some good reasons to. First, interest rates today are superlow. Apple can refinance some of its existing short-term debt at a lower cost and at extended maturities.
Almost half of the new bonds Apple sold aren’t due for at least 20 years. Locking in today’s rock-bottom rates for decades is a good idea.
Plus, even $14 billion in new debt isn’t that much for a company of Apple’s size. It just reported $112 billion in revenue for the fourth quarter and has a market value of nearly $2.3 trillion.
A Historical Look at the Short Squeeze
The price of stock in grocery chain Piggly Wiggly at its peak back in March 1923 was $124. It was up threefold in just a few months. The GameStop (GME) short squeeze has captured the world’s attention, but the phenomenon is nothing new.
Piggly Wiggly’s founder, Clarence Saunders, had borrowed $10 million on margin and enlisted other investors to buy up as many shares of the grocery store pioneer’s stock as they could. That sent short sellers fleeing, Barron’s wrote at the time, and Piggly Wiggly’s stock price soaring, until trading was suspended by the New York Stock Exchange.
The Piggly Wiggly squeeze made millionaires in today’s dollars out of everyday shareholders, but it ended up ruining Saunders. His buying spree pushed the shorts out of the stock, but like GameStop this week, the shares didn’t stay at those levels for long. It left Saunders and his associates with tens of thousands of shares purchased at much higher prices.
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Write to Nicholas Jasinski at [email protected]
