If Your Market ‘Darling’ Is Done… Move On

When do we pay attention to the news?

When the news is real, harsh, and not hyped.

Peloton (PTON) has taken a beating after news that its popular exercise treadmills are being recalled, around 125,000 units. The recall is in response to a U.S. Consumer Product Safety Commission recommendation after a death and injuries were associated with the products.

PTON enjoyed stellar sales growth last year during the Covid-19 pandemic that pushed people inside for exercise. The company was trading at $19 in March last year before skyrocketing to $171 in January this year. PTON was losing its “pandemic high” prior to the recall, and was down 14.56% to close at $82.62 today.

Stocks rise and fall all the time, so why focus on PTON?

This company has been a ”darling,” go-to stock on the rise since the pandemic hit hard. PTON benefited from high consumer interest like so many health and fitness, movie streaming, or exercise companies when lockdowns sent the economy and stock market into shock.

Many pandemic darlings are waning as the economy reopens and people head outside again or back to the gym. Any hiccup in their operations or sales can gear down their trading attraction.

This recent harsh news about the PTON treadmill recall is an example of how traders must be ready for anything and not “married” to a darling ticker. Traders trying to “stick with it” for this ticker could be in for a rough run.

Why pay attention to any sinking stock? Just because one darling stock was fun for a time, doesn’t mean that ticker is going to hold its profit potential forever. Be prepared to move on to the next opportunity

If harsh news hits a stock, step off that treadmill and avoid injuring your trading game.

There are more opportunities out there, and that is the daily focus for the Simpler team.

We Saw: Frosty market with patches of upside — 

• Many stocks, not necessarily “favorites,” show promise
• Cryptocurrency still shining across the board
• Government affecting day-to-day life — paychecks, evictions

We’re Watching: “Darling” tickers that slip, fall… next? —

• Space tourism blasting off this summer?
• Effects in housing sector after judge lifts eviction moratorium
• Setups that revert back to technical basics